U.S. GOVERNMENT PUBLISHING OFFICE

WASHINGTON : 

For sale by the Superintendent of Documents, U.S. Government Publishing Office

Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800

Fax: (202) 512–2104 Mail: Stop IDCC, Washington, DC 20402–0001

82–448 PDF 2015

HEALTH CARE CHALLENGES FACING KENTUCKY’S 

WORKERS AND JOB CREATORS 

FIELD HEARING 

BEFORE THE

SUBCOMMITTEE ON HEALTH, 

EMPLOYMENT, LABOR, AND PENSIONS 

COMMITTEE ON EDUCATION 

AND THE WORKFORCE 

U.S. HOUSE OF REPRESENTATIVES

ONE HUNDRED THIRTEENTH CONGRESS 

FIRST SESSION 

HEARING HELD IN LEXINGTON, KENTUCKY, AUGUST 27, 2013 

Serial No. 113–29 

Printed for the use of the Committee on Education and the Workforce 

( 

Available via the World Wide Web: 

www.gpo.gov/fdsys/browse/committee.action?chamber=house&committee=education 

or 

Committee address: http://edworkforce.house.gov 

CEWDOCROOM with DISTILLER

(II) 

COMMITTEE ON EDUCATION AND THE WORKFORCE 

JOHN KLINE, Minnesota, Chairman 

Thomas E. Petri, Wisconsin 

Howard P. ‘‘Buck’’ McKeon, California 

Joe Wilson, South Carolina 

Virginia Foxx, North Carolina 

Tom Price, Georgia 

Kenny Marchant, Texas 

Duncan Hunter, California 

David P. Roe, Tennessee 

Glenn Thompson, Pennsylvania 

Tim Walberg, Michigan 

Matt Salmon, Arizona 

Brett Guthrie, Kentucky 

Scott DesJarlais, Tennessee 

Todd Rokita, Indiana 

Larry Bucshon, Indiana 

Trey Gowdy, South Carolina 

Lou Barletta, Pennsylvania 

Martha Roby, Alabama 

Joseph J. Heck, Nevada 

Susan W. Brooks, Indiana 

Richard Hudson, North Carolina 

Luke Messer, Indiana 

George Miller, California, 

Senior Democratic Member 

Robert E. Andrews, New Jersey 

Robert C. ‘‘Bobby’’ Scott, Virginia 

Rube ́n Hinojosa, Texas 

Carolyn McCarthy, New York 

John F. Tierney, Massachusetts 

Rush Holt, New Jersey 

Susan A. Davis, California 

Rau ́l M. Grijalva, Arizona 

Timothy H. Bishop, New York 

David Loebsack, Iowa 

Joe Courtney, Connecticut 

Marcia L. Fudge, Ohio 

Jared Polis, Colorado 

Gregorio Kilili Camacho Sablan, 

Northern Mariana Islands 

John A. Yarmuth, Kentucky 

Frederica S. Wilson, Florida 

Suzanne Bonamici, Oregon 

Juliane Sullivan, Staff Director 

Jody Calemine, Minority Staff Director 

SUBCOMMITTEE ON HEALTH, EMPLOYMENT, LABOR, AND PENSIONS 

DAVID P. ROE, Tennessee, Chairman 

Joe Wilson, South Carolina 

Tom Price, Georgia 

Kenny Marchant, Texas 

Matt Salmon, Arizona 

Brett Guthrie, Kentucky 

Scott DesJarlais, Tennessee 

Larry Bucshon, Indiana 

Trey Gowdy, South Carolina 

Lou Barletta, Pennsylvania 

Martha Roby, Alabama 

Joseph J. Heck, Nevada 

Susan W. Brooks, Indiana 

Luke Messer, Indiana 

Robert E. Andrews, New Jersey, 

Ranking Member 

Rush Holt, New Jersey 

David Loebsack, Iowa 

Robert C. ‘‘Bobby’’ Scott, Virginia 

Rube ́n Hinojosa, Texas 

John F. Tierney, Massachusetts 

Rau ́l M. Grijalva, Arizona 

Joe Courtney, Connecticut 

Jared Polis, Colorado 

John A. Yarmuth, Kentucky 

Frederica S. Wilson, Florida 

CEWDOCROOM with DISTILLER

(III) 

C O N T E N T S 

Page 

Hearing held on August 27, 2013 ........................................................................... 1 

Statement of Members: 

Barr, Hon. Andy, a Representative in Congress from the state of Kentucky .............................................................................................................. 8 

Prepared statement of ............................................................................... 10 

Guthrie, Hon. Brett, a Representative in Congress from the state of 

Kentucky ........................................................................................................ 6 

Prepared statement of ............................................................................... 7 

Roe, Hon. David P., Chairman, Subcommittee on Health, Employment, 

Labor and Pensions ...................................................................................... 1 

Prepared statement of ............................................................................... 2 

Yarmuth, Hon. John A., a Representative in Congress from the state 

of Kentucky ................................................................................................... 3 

Prepared statement of ............................................................................... 5 

Statement of Witnesses: 

Banahan, Carrie, Executive Director, Office of the Kentucky Health Benefits Exchange ................................................................................................. 16 

Prepared statement of ............................................................................... 18 

Basham, Debbie, Southwest Breast Cancer Awareness Group .................... 47 

Prepared statement of ............................................................................... 49 

Bologna, Joe, Owner, Joe Bologna’s Italian Pizzeria and Restaurant ......... 14 

Prepared statement of ............................................................................... 16 

Humkey, John, President, Employee Benefit Association, Inc. .................... 19 

Prepared statement of ............................................................................... 21 

Kanaly, Tim, Owner and President, Gary Force Honda, Bowling Green .... 12 

Prepared statement of ............................................................................... 13 

McPhearson, John, CEO, Lectrodryer ............................................................ 50 

Prepared statement of ............................................................................... 53 

Meadows, Donnie, Vice President Of Human Resources, K-VA-T Food 

Stores, Inc. ..................................................................................................... 41 

Prepared statement of ............................................................................... 43 

Moores, Janey, President and CEO, BJM & Associates, Inc. ....................... 30 

Prepared statement of ............................................................................... 33 

Additional Submissions: 

Roe, Hon. David P., Chairman, Subcommittee on Health, Employment, 

Labor and Pensions, submitted for the record: 

Prepared statement of Randall Childers Consulting ............................. 58 

CEWDOCROOM with DISTILLER

CEWDOCROOM with DISTILLER

(1) 

HEALTH CARE CHALLENGES FACING 

KENTUCKY’S 

WORKERS AND JOB CREATORS 

Tuesday, August 27, 2013 

House of Representatives 

Subcommittee on Health, Employment, Labor, and Pensions 

Committee on Education and the Workforce 

Washington, D.C. 

The subcommittee met, pursuant to call, at 10:02 a.m., at the 

Lexington Public Library, Farish Theater, 40 East Main Street, 

Lexington, Kentucky, David Roe [chairman of the subcommittee] 

presiding. 

Present: Representatives Roe, Guthrie, and Yarmuth. 

Also Present: Representative Barr. 

Staff Present: Molly Conway, Professional Staff Member; Benjamin Hoog, Senior Legislative Assistant; Alex Sollberger, Communications Director; Todd Spangler, Senior Health Policy Advisor; 

and Mark Zuckerman, Minority Senior Economic Advisor. 

Chairman ROE. The Subcommittee on Health, Employment, 

Labor, and Pensions will come to order. 

Good morning, everyone, and welcome to today’s hearing. I would 

like to first take a moment to welcome our witnesses joining us to 

discuss the important issue of healthcare. 

I would also like to thank the staff at the Lexington Public Library for their warm hospitality, and what a terrific facility you 

have here. And I think libraries speak volumes about the community that you live in, and this certainly is a real plus for Lexington. 

Since the President’s plan for healthcare reform became law in 

2010, employers and job creators have grown increasingly worried 

about the law’s effect on their families and small businesses. More 

than 11 million Americans are searching for a job today, including 

178,000 workers here in the Bluegrass State. Building a stronger 

economy for businesses to grow and hire new workers remains a 

national priority. As elected policy makers, we have to examine 

whether Federal policies are helping or hurting that effort. 

According to the so-called experts in Washington, the healthcare 

law is working just fine. Secretary Kathleen Sebelius, the President’s top healthcare official, described reports of job losses stemming from the law is speculation. I was there in the committee 

hearing the day she said that. 

The White House called the law’s pervasive incentive for businesses to rely more on part-time employees an urban legend, and 

the President himself has dismissed problems with implementation 

of the law as mere glitches or bumps. 

CEWDOCROOM with DISTILLER

2 

However, news reports and personal experiences of everyday 

Americans reveal a much harsher reality than supporters of the 

Obamacare would like to admit. It seems each day workers and job 

creators encounter new challenges as they look to ease the pain 

this government takeover of healthcare has inflicted on their workplaces. The leading concern for many is the employer mandate, 

which requires businesses with 50 or more full-time workers to provide government-approved health insurance or pay higher taxes. 

The non-partisan Congressional Budget Office has said this mandate will impose a $140 billion tax increase on employers. It is no 

secret what happens when job creators are forced to pay higher 

taxes. Fewer jobs are created and more costs are pushed to consumers. This is precisely what employers have said time and again. 

For example, a Gallup poll showed 41 percent of employers have 

frozen hiring due to the healthcare law. The same poll revealed 

more than half of small business owners expect the law will increase healthcare costs. As a result, 1 out of 4 small business owners may stop offering health insurance as they try to control the 

costs. 

Perhaps this explains why President Obama decided to delay enforcement of the employer mandate for 1 year. While this temporary reprieve is certainly welcome news, it does not alter the fact 

that this fatally flawed law will destroy jobs regardless of when it 

is implemented. 

The unilateral delay of the employer mandate is also an implicit 

admission that the President’s healthcare law is not working. In 

fact, the law is making our economy and health system worse. As 

a doctor who practiced medicine for more than 30 years, I know our 

healthcare system is not perfect. It is far too expensive and too 

many families lack access to affordable care. 

If we are going to put Americans back to work and advance 

smarter reforms that will lower healthcare costs, we must first repeal or dismantle the President’s misguided law. Today’s hearing 

plays a vital role in reaching these important goals. 

I want to thank our witnesses again for being with us today and 

sharing their personal experiences with the committee. 

With that, I now will recognize my distinguished colleague and 

good friend, John Yarmuth, the acting senior Democrat member of 

the subcommittee, for his remarks. Congressman Yarmuth? 

[Applause.] 

[Disturbance in hearing room.] 

[The statement of Chairman Roe follows:] 

Prepared Statement of Hon. Phil Roe, Subcommittee on Health, 

Employment, Labor, and Pensions 

Good morning everyone and welcome to today’s hearing. I’d first like to take a 

moment to thank our witnesses for joining us to discuss the important issue of 

health care. I would also like to thank the staff at the Lexington Public Library for 

their warm hospitality. 

Since the president’s plan for health care reform became law in 2010, employers 

and job creators have grown increasingly worried about the law’s effect on their 

families and small businesses. More than 11 million Americans are searching for 

a job today–including 178,000 workers here in the Bluegrass State. Building a 

stronger economy for businesses to grow and hire new workers remains a national 

priority. As elected policymakers, we have to examine whether federal policies are 

helping or hurting that effort. 

CEWDOCROOM with DISTILLER

3 

According to the so-called experts in Washington, the health care law is working 

just fine. Secretary Kathleen Sebelius, the president’s top health care official, described reports of job losses stemming from the law as ‘‘speculation.’’ The White 

House called the law’s perverse incentive for businesses to rely more on part-time 

employees an ‘‘urban legend.’’ And the president himself has dismissed problems 

with implementation of the law as mere ‘‘glitches and bumps.’’ 

However, news reports and personal experiences of every day Americans reveal 

a much harsher reality than supporters of ObamaCare would like to admit. It seems 

each day workers and job creators encounter new challenges as they look to ease 

the pain this government takeover of health care has inflicted on their workplaces. 

A leading concern for many is the employer mandate, which requires businesses 

with 50 or more full-time workers to provide government-approved health insurance 

or pay higher taxes. The nonpartisan Congressional Budget Office has said this 

mandate will impose a $140 billion tax increase on employers. It’s no secret what 

happens when job creators are forced to pay higher taxes: Fewer jobs are created. 

This is precisely what employers have said time and again. For example, a Gallup 

poll showed 41 percent of employers have frozen hiring due to the health care law. 

The same poll revealed more than half of small business owners expect the law will 

increase health care costs. As a result, one out of four small business owners may 

stop offering health insurance as they try to control costs. 

Perhaps this explains why President Obama decided to delay enforcement of the 

employer mandate for one year. While this temporary reprieve is certainly welcome 

news, it does not alter the fact this fatally flawed law will destroy jobs–regardless 

of when it is implemented. The unilateral delay of the employer mandate is also an 

implicit admission that the president’s health care law isn’t working. In fact, the 

law is making our economy and health care system worse. 

As a doctor who practiced medicine for more than 30 years, I know our health 

care system isn’t perfect. It is far too expensive and too many families lack access 

to affordable care. If we are going to put Americans back to work and advance 

smarter reforms that will help lower health care costs, we must first repeal or dismantle the president’s misguided law. 

Today’s hearing plays a vital role in reaching these important goals. I want to 

thank our witnesses again for being with us today and sharing their personal experiences with the committee. With that, I will now yield to my colleague, Congressman Brett Guthrie, for his opening remarks. 

Mr. YARMUTH. Thank you. 

Chairman ROE. Would you yield for one moment? 

Mr. YARMUTH. I will yield, Mr. Chairman. 

Chairman ROE. Let me tell you all to start with, this is the 

fourth hearing I have had like this across the country. I am a very 

respectful person. This is not a town hall meeting. This is an official hearing of the U.S. Congress. 

I want to start by reading the initial disruption of this hearing 

right now. Number one, the committee is not in order. I want to 

make it clear to our guests in the audience that any comments or 

disruptions during today’s meeting from the public will not be tolerated, and if, necessary, will result in the removal of those disrupting from the committee room. That is the first one. 

And I am going to say that we want you to be here. I want you 

to listen, and we are not going to comment. But if you do, that is 

the initial request I am making of you now respectfully. 

Now, Mr. Yarmuth? 

Mr. YARMUTH. Thank you, Mr. Chairman. And I will echo your 

remarks, and also certainly testify to the fact that you are an extremely honorable man and chairman, so I appreciate you calling 

this hearing. And also it is good to be here with my friends and 

colleagues, Congressmen Barr and Guthrie. 

Thank you once again for holding this hearing. I also want to 

thank all of you in the audience for joining us today to discuss the 

Affordable Care Act, and for the witnesses, in particular. I know 

CEWDOCROOM with DISTILLER

4 

it takes a lot of courage to share your stories in a congressional 

hearing, and I commend all of you for being here. 

I also want to recognize Governor Beshear and Carrie Banahan, 

director of the Kentucky Health Benefit Exchange. Because of their 

great work in preparing Kentucky’s health insurance marketplace, 

our Commonwealth is positioned to be a national model. 

Today and in the next several months and in the years to follow, 

every person in this room will have a different story to tell about 

the Affordable Care Act. Some will have access to affordable, quality care for the first time. Others will have the benefit of insurance 

as they fight their second, third, or fourth battle with cancer. I 

have heard from individuals whose lives have been transformed, 

and several whose lives have been saved, by the law. 

Under the law, preexisting conditions will no longer prevent you 

from getting coverage. The healthcare exchanges will offer new coverage options, and Kentuckians will be able to compare plans the 

way they shop for flights online. If you are a small business owner, 

you will be able to take advantage of tax credits to provide insurance to your employees and make yourself a more competitive employer. 

I would just like to add that far from being a job destroyer, there 

is evidence that this act has already been a job creator. Last week 

in a released report, a national survey of small businesses under 

50 employees, employment is up by 6 percent this year. Small businesses are borrowing to expand, and confidence levels of small 

business owners is at a high over the last 7 or 8 years. 

If you are a young person embarking on a career for the first 

time, you can stay on your parents’ insurance so you can focus on 

building a stronger future right from the start. 

Healthcare affects everyone differently, which makes healthcare 

policy difficult to explain and easy to spin. But after 40 failed attempts to repeal, undermine, or defund the Affordable Care Act, I 

think that we owe it to our constituents to acknowledge that this 

is the law, and its implementation is ongoing and inevitable. 

Over the next several months, we are going to make history here 

in the Commonwealth: 640,000 uninsured Kentuckians will become 

eligible for coverage, many for the first time. This builds on the 

progress we have made in Kentucky during the past 3 years as a 

result of the Affordable Care Act. So far, the law has saved 72,000 

Kentucky seniors $112 million on prescription drugs by closing the 

prescription drug donut hole. It has enabled 48,000 additional 

young adults to get coverage through their parents’ health insurance plan. It has provided critical preventive care for 650,000 

women and 486,000 seniors and people with disabilities. And it has 

provided $15 million in rebates from insurance companies to a 

quarter of a million Kentuckians. 

Across the country, the ACA is putting customers back in charge 

of their healthcare. For the first time in our history, insurance 

companies cannot say no to you if you have a preexisting condition, 

like diabetes, cancer, or heart disease. Your medical history is your 

business alone. You will not face annual or lifetime limits on coverage, meaning battling a major disease will not lead to bankruptcy. And you will get a rebate if your insurance company spends 

CEWDOCROOM with DISTILLER

5 

less than 80 percent of your premium dollar on anything other 

than your care. 

Investing in access to healthcare gives Kentucky families new opportunities to prosper. It also means economic prosperity and jobs 

for Kentucky. According to a University of Louisville study, new 

healthcare investment will create nearly 17,000 jobs and generate 

an additional $15.6 billion in economic activity in Kentucky over 

the next several years. 

It is also fiscally prudent. The governor’s actions on healthcare 

will mean hundreds of millions of dollars in savings for the State 

through 2021. 

Now, we know there are some issues that need to be resolved 

with the law. For instance, the administration is continuing to 

work with the Restaurant Association and Retailers on safe harbor 

provisions that will largely address problems they are seeing with 

employee hour requirements. They have also delayed the employer 

mandate so that issues like the ones Mr. Kanaly and Mr. Bologna 

will raise in their testimony can be resolved. 

So today I hope we will focus on what would be the most beneficial to our constituents and Kentucky businesses, ensuring that 

they are taking advantage of every benefit the law has to offer, and 

raising any concerns so that they can be addressed as we move forward with implementation. 

I look forward to today’s testimony. I yield back. Thank you, Mr. 

Chairman. 

[The statement of Mr. Yarmuth follows:] 

Prepared Statement of Hon. John A. Yarmuth, a Representative in 

Congress from the state of Kentucky 

Chairman Roe and My Colleagues Congressmen Barr and Guthrie: 

Thank you for holding today’s hearing. I also want to thank all of you in the audience for joining us today to discuss the Affordable Care Act. And for the witnesses 

in particular, I know it takes a lot of courage share your story in a Congressional 

hearing, and I commend all of you for being here. 

And I want to recognize Governor Steve Beshear and Carrie Banahan, director 

of the Kentucky Health Benefit Exchange. Because of their great work in preparing 

Kentucky’s health insurance marketplace, our Commonwealth is positioned to be a 

national model. 

Today, and in the next several months, and in the years to follow, every person 

in this room will have a different story to tell about the Affordable Care Act. Some 

will have access to affordable, quality care for the first time. Others will have the 

benefit of insurance as they fight their second, third, fourth battle with cancer. I’ve 

heard from individuals whose lives have been transformed, and several whose lives 

have been saved, by the law. 

Under the law, pre-existing conditions will no longer prevent you from getting 

coverage. The health care exchanges will offer new coverage options, and Kentuckians will be able to compare plans the way you shop for flights online. 

If you’re a small-business owner, you will be able to take advantage of tax credits 

to provide insurance to your employees and make yourself a more competitive employer. If you’re a young person embarking on a career for the first time, you can 

stay on your parents’ insurance – so you can focus on building a strong future right 

from the start. 

Health care affects everyone differently, which makes health care policy difficult 

to explain and easy to spin. But after 40 failed attempts to repeal, undermine, or 

defund the Affordable Care Act, I think we owe it to our constituents to acknowledge that this is the law, and its implementation is ongoing and inevitable. 

In the next several months, we are going to make history here in the Commonwealth: 640,000 uninsured Kentuckians will become eligible for coverage – many for 

the first time. 

This builds on the progress we’ve seen in Kentucky during the past three years 

as a result of the Affordable Care Act. So far, the law has: 

CEWDOCROOM with DISTILLER

6 

• Saved 72,000 Kentucky seniors $112 million on drugs by closing the prescription drug donut hole; 

• Enabled 48,000 additional young adults to get coverage through their parents’ 

health insurance plan; 

• Provided critical preventive care for 650,000 women and 486,000 seniors and 

people with disabilities; 

• Provided $15 million in rebates from insurance companies to a quarter of a million Kentuckians. 

Across the country, the ACA is putting consumers back in charge of their health 

care. For the first time in our history, insurance companies can’t say no if you have 

a pre-existing condition like diabetes, cancer, or heart disease. Your medical history 

is your business alone. 

You won’t face annual or lifetime limits on coverage, meaning battling a major 

disease won’t lead to bankruptcy. And you’ll get a rebate if your insurance company 

spends less than 80 percent of your premium dollar on anything other than your 

care. 

Investing in access to health care gives Kentucky families new opportunities to 

prosper. It also means economic prosperity and jobs for Kentucky. 

According to a University of Louisville study, new health care investment will create nearly 17,000 jobs and generate an additional $15.6 billion economic activity in 

Kentucky over the next several years. It is also fiscally prudent: the Governor’s actions on health care will mean hundreds of millions of dollars in saving for the state 

through 2021. 

Now, we know there are some issues that need to be resolved with the law. For 

instance, the administration is continuing to work with the restaurant association 

and retailers on safe harbor provisions that will largely address problems they’re 

seeing with employee hour requirements. They have also delayed the employer mandate, so that issues like the one Mr. Kanaly will raise in his testimony can be resolved. 

So today, I hope we will focus on what will be the most beneficial to our constituents and Kentucky businesses: ensuring that they are taking advantage of every 

benefit the law has to offer and raising any concerns so that they can be addressed 

as we move forward with implementation. I look forward to today’s testimony. 

Chairman ROE. I thank the gentleman for yielding. 

I now will yield to my friend and colleague, Mr. Brett Guthrie, 

for his opening remarks. 

Mr. GUTHRIE. Thank you, Mr. Chairman. Thanks for coming to 

Kentucky today. I appreciate having you. He grew up just on the 

wrong side of the border in Clarksville, Tennessee, so he is very 

close to being a Kentuckian, but not quite. 

And it is always great to be with Congressman Yarmuth and 

Congressman Barr. We have crossed paths a few times since we 

have been home in August, and it always great to cross paths with 

you guys. 

And thank you for being here, and I appreciate you all coming 

here today, and everybody here today, to talk about the impact that 

the healthcare bill has on our employers in the Commonwealth. 

And throughout August all the way through early September, I 

am doing 21 town hall meetings. And I have done 14, and I am 

doing them one in each county. And when we open it up, what 

most people want to talk about is the healthcare bill—that is the 

number one issue—and the impact it will have on them, their jobs, 

and their employer, and their healthcare coverage. 

And there are a lot of questions that have been asked, and unfortunately we have yet to come up with answers to these questions, 

such as, will their employer reduce their hours so they will no 

longer trigger the requirement for health insurance? Will they be 

able to stay on their current health insurance plan? Will their premiums be affordable, or will they have to spend more for essenCEWDOCROOM with DISTILLER

7 

tially the same coverage? Will employers be able to continue to afford to provide insurance for their workers? And will they be able 

to hire the few extra workers they need, or will that cause them 

to trigger the employer mandate? 

And so, this one-size-fits-all law is providing a great concern for 

consumers, employers, and healthcare providers alike. 

In July, the non-partisan Government Accountability Office 

warned that because government officials have missed multiple key 

deadlines to set up the new healthcare exchanges, there is serious 

concern that the exchanges will be not ready in October as scheduled. And the IT data security testing necessary to open the exchanges was recently pushed back until September 30th, the day 

before the exchanges are expected to go live. This is after multiple 

missed deadlines and leaving them no buffer to correct any problems, risking possible security lapses. 

Employers and families across Kentucky have expressed, in my 

town hall meetings in different ways, have expressed serious concerns about meeting the requirements of the law, and wondering 

if they will lose their coverage, be forced to choose different providers, or be saddled with enormous new costs. And given the Administration’s move to delay only the employer mandate, families 

and small business owners are left with even more uncertainty. 

Small businesses are the backbone of our economy and likely to 

be the hardest hit. Some local employers say the law could put 

them out of business. One restaurant owner says it will be a challenge for the whole industry, and many will be forced to lay off employees. Others simply say it will be extremely difficult to insure 

all of their existing employees. 

With the lack of information and transparency from the Administration, business leaders do not even know what types of insurance 

programs they might be able to offer, or if they will be forced to 

alter the shape of their workforce in order for their business to stay 

afloat. Given the lack of information and tools available for implementation, it is evident that not only is this law not the solution 

to our healthcare problems, but it is not ready for implementation. 

I hope that today’s field hearing will offer us the opportunity to 

explore these concerns further and hear directly from employers 

about how the law is impacting them. I appreciate the committee’s 

efforts in this area, especially those of Chairman Roe, and I welcome him to the Commonwealth. And I yield back the balance of 

my time. 

[The statement of Mr. Guthrie follows:] 

Prepared Statement of Hon. Brett Guthrie, a Representative in Congress 

from the state of Kentucky 

Thank you, Mr. Chairman. I appreciate you all coming to Kentucky today to discuss Obamacare and the impact it’s having on the economy and employers, particularly in the Commonwealth of Kentucky. Throughout August and the beginning of 

September, I am hosting 21 town hall meetings – one in every county in the Second 

District. Obamacare continues to be a top issue at each meeting, with Kentuckians 

wondering how it will impact them, their employees, their jobs, and their health 

care coverage. 

Unfortunately, we don’t have all the answers. The law that was famously ‘‘passed 

so we could find out what’s in it’’ has yet to calm the fears of ordinary citizens. Will 

their employer reduce their hours so they no longer trigger the requirement for 

health insurance? Will they be able to stay on their current health insurance plan? 

Will their premiums be affordable or will they have to spend more for essentially 

CEWDOCROOM with DISTILLER

8 

the same coverage? Will employers be able to continue to afford to provide insurance 

for their workers? Will they be able to hire the few extra workers they need or will 

that cause them to trigger the employer mandate? 

There is no shortage of red flags when it comes to the train wreck known as 

Obamacare. The one-size-fits-all law is proving to be disastrous for consumers, employers and health care providers alike. In July, the nonpartisan Government Accountability Office warned that because government officials have missed multiple 

key deadlines to set up the new health insurance exchanges, there is serious concern that the exchanges will not be ready in October, as scheduled. 

The IT data security testing necessary to open the exchanges was recently pushed 

back until September 30th – the day before the exchanges are expected to go live. 

This is after multiple missed deadlines and leaving them with no buffer to correct 

any problems, risking possible security lapses. 

Employers and families across Kentucky have expressed serious concerns about 

meeting the requirements of the law and wondering if they will lose their coverage, 

be forced to choose different providers, or be saddled with enormous new costs. 

Given the Administration’s move to delay only the employer mandate, families and 

small business owners are left with even more uncertainty. 

Small businesses, the backbone of our economy, are likely to be hardest hit. Some 

local insurers say the law could put them out of business. One restaurant owner 

says it will be a challenge for the whole industry and many will be forced to lay 

off employees. Others simply say it will be extremely difficult to insure all of their 

existing employees. With the lack of information and transparency from the Administration, business leaders don’t even know what types of insurance programs they 

might be able to offer or if they will be forced to alter the shape of their workforce 

in order for their business to stay afloat. 

Given the lack of information and tools available for implementation, it is evident 

that not only is this law not the solution to our nation’s health care problems, but 

it is not ready for implementation. I hope that today’s field hearing will offer us an 

opportunity to explore these concerns further and hear directly from employers 

about how the law is impacting them. 

I appreciate the Committee’s efforts in this area, especially those of Chairman 

Roe. I welcome him to the Commonwealth and yield back the balance of my time. 

Chairman ROE. Thank the gentleman for yielding. 

I now yield to my friend and colleague, Mr. Andy Barr, for his 

opening remarks. 

Mr. BARR. Thank you, Mr. Chairman. I would like to thank everybody for coming today and participating in this field hearing. I 

would especially like to thank the House Education and Workforce 

Committee for its interest and willingness to come to Lexington, 

Kentucky, my hometown, to hold this hearing. 

Thank you to Chairman Roe, Congressman Guthrie, and Congressman Yarmuth, for traveling to the 6th Congressional District 

so that we can continue to assess the impact of the Affordable Care 

Act, commonly known as Obamacare, on American families and 

employers. 

Finally, I would like to thank all of the witnesses with us today. 

You all are the most vital part of this hearing because you can provide vital, firsthand insights into the healthcare challenges facing 

workers and small businesses. We are here to listen to what you 

have to say. 

It is clear that cracks in Obamacare are growing and getting 

deeper. Slowly but steadily, the Administration and its supporters 

have reluctantly had to acknowledge the shortcomings of the law. 

In the past few weeks and months, we have news stories about 

problems with implementation of Obamacare . We have seen front 

page stories about massive rate increases in the insurance market, 

and we have all heard about the Administration’s decision to temCEWDOCROOM with DISTILLER

9 

porarily delay for 1 year the implementation of the law’s employer 

mandate. 

And, in particular, what concerns me about that unilateral decision is whether or not the Administration’s decision through administrative fiat complies with the take care clause in the Constitution. 

While I certainly welcome the Administration’s interest in saving 

businesses from Obamacare’s costly and burdensome mandates, 

this does raise a number of questions that are central to the viability of the law. 

First, if the employer mandate is simply so unworkable that it 

needs to be delayed until after 2014, nearly 5 years after the President signed it into law, why should employers believe that this 

mandate will become any more acceptable in 2015 and every year 

thereafter? 

Secondly, why not provide for a permanent delay of the employer 

mandate as opposed to holding the specter of its implementation 

over the heads of employers? 

And finally, if a reprieve from Obamacare mandates is going to 

be provided to America’s businesses, should America’s families not 

also receive that same benefit of delay from the high cost of 

Obamacare in the individual mandate? 

Now, my opposition to Obamacare is not a partisan one. It is not 

simply because the President is a Democrat. It is not simply because— 

[Disturbance in hearing room.] 

Mr. BARR. I would yield. 

Chairman ROE. I will interrupt you for a second. This is the second disruption we have got. I am not going to tolerate this in this 

hearing. Pursuant to House rules and rules of the committee, the 

chair has a duty to maintain order and decorum during committee 

meetings. This is not a town hall meeting. 

Members of the audience must maintain order and refrain from 

manifestations of approval or disapproval of the committee proceedings or interfere with the conduct of the committee’s business. 

It is the duty of the chair to order those in the audience causing 

the disruption to cease their actions immediately, and, if necessary, 

be removed by persons responsible for the disturbance. Those removed may be subject to arrest. 

Please allow the committee to continue with the meeting. This is 

not a town hall. 

And I will yield back. 

Mr. BARR. Thank you, Mr. Chairman. 

My opposition to Obamacare is not a partisan one. It is not simply because the President is a Democrat and I am a Republican. 

And, in fact, I very much appreciate the participation of Congressman Yarmuth in this hearing. I think this is an opportunity for all 

of us to look for solutions on a bipartisan basis hopefully as much 

as possible. 

But my opposition is simply because I believe Obamacare is bad 

policy for the American people. Obamacare does nothing to lower 

healthcare costs, which are the main driver of our debt. Instead the 

law will lead to massive job losses, the rationing of care, insurance 

policy changes, trillion dollar tax increases, increases in the naCEWDOCROOM with DISTILLER

10 

tional debt, violations of religious liberties, increases to healthcare 

premiums, and costs on American families. 

In fact, despite the President’s promise that premiums would decrease by $2,500, the average family premium has grown by over 

$3,000 since 2008. 

On top of all of this, it is worth noting that young people are 

among the most punished by this law. Reports indicate rate shock 

for young adults under this law with these individuals seeing premiums increase on the average between 145 and 189 percent annually. 

As you can all see, there are many different aspects to this law. 

I am excited for today’s hearing, though, because it is a great opportunity for us to dive further into one particular area: 

Obamacare’s impact on jobs. 

One of my top priorities in Congress is getting Kentuckians back 

to work, and I believe that Obamacare stands firmly in the way of 

this goal. 

As I have traveled around the 6th District and spoken with employers throughout central and eastern Kentucky, a consistent 

theme I have heard is employers citing Obamacare as creating a 

severe chilling effect on their ability to retain and hire workers. It 

is important for us to listen to our constituents, and that is what 

they are telling us. 

And this is certainly not a sentiment exclusive to Kentucky. A 

March report from the Federal Reserve specifically stated, ‘‘Employers in several districts cited the unknown effects of the Affordable Care Act as reasons for planned layoffs and reluctance to hire 

more staff.’’ Further, according to a study by the National Federation of Independent Business, an employer mandate, like the one 

included in Obamacare, could eliminate over 1 million jobs. 

So I would just like to conclude my remarks by, again, thanking 

everybody for being here. There are significant concerns with how 

Obamacare will lead to shifting more and more full-time workers 

to a part-time basis. These are folks sometimes commonly known 

as the 29ers—29 hours to avoid the 30-hour threshold in the law. 

And while this may seem odd and counterproductive, the law is unfortunately forcing employers to get creative in order to free themselves from its mandate and higher costs. 

The bottom line is that Kentucky’s workers, families, and job creators deserve permanent relief from Obamacare, not a 1-year reprieve. I am hopeful that this hearing can play a constructive role 

in the process by shining a spotlight on the need to provide permanent relief from Obamacare. I look forward to hearing from the witnesses and, again, thank them for coming here today to share their 

story. 

I yield back. 

[The statement of Mr. Barr follows:] 

Prepared Statement of Hon. Andy Barr, a Representative in Congress from 

the State of Kentucky 

I’d like to thank everyone for coming today and participating in this field hearing. 

I’d especially like to thank the House Education and the Workforce Committee for 

its interest and willingness to come to Lexington, Kentucky to hold this hearing. 

Thank you to Chairman Roe, Congressman Guthrie, and Congressman Yarmuth for 

traveling to the Sixth District so that we can continue to assess the impact of the 

CEWDOCROOM with DISTILLER

11 

Affordable Care Act – commonly known as Obamacare – on American families and 

employers. 

Finally, I’d like to thank all the witnesses with us today. You are the most important part of this hearing because you can provide vital, first-hand insights into the 

health care challenges facing workers and small businesses. We are here to listen 

to what you have to say. 

It’s clear that cracks in Obamacare are growing and getting deeper. Slowly but 

steadily, the Administration and its supporters have reluctantly had to acknowledge 

the shortcomings of the law. In the past few weeks and months, we have seen the 

news stories about problems with the implementation of Obamacare; we have seen 

front page stories about massive rate increases in the insurance market; and we 

have all heard about the Administration’s decision to temporarily delay for one year 

the implementation of the law’s employer mandate. 

While I certainly welcome the Administration’s interest in saving businesses from 

Obamacare’s costly and burdensome mandates, this does raise a number of questions that are central to the viability of the law: 

• If the employer mandate is simply so unworkable that it needs to be delayed 

until after 2014 – nearly five years after the President signed it into law – why 

should employers believe that this mandate will become any more acceptable in 

2015 and every year thereafter? 

• Why not provide for a permanent delay of the employer mandate, as opposed 

to holding the specter of its implementation over the heads of employers? 

• Finally, if a reprieve from Obamacare’s mandates is going to be provided to 

America’s businesses, shouldn’t America’s families also receive that same benefit of 

delay from the high costs of Obamacare? 

Now, my opposition to Obamacare is not a partisan one – it’s not simply because 

the President is a Democrat and I’m a Republican. My opposition is simply because 

I believe that Obamacare is bad policy for the American people. Obamacare does 

nothing to lower healthcare costs, which are the main driver of our debt. Instead, 

the law will lead to massive job losses, the rationing of care, insurance policy 

changes, trillion dollar tax increases, increases to the national debt, violations of religious liberties, and higher health care premiums and costs on American families. 

In fact, despite the President’s promise that premiums would decrease by $2,500, 

the average family premium has grown by over $3,000 since 2008. 

On top of all of this, it’s worth noting that young people are among those most 

punished by the law. Reports indicate a rate shock for young adults under this law, 

with these individuals seeing premiums increase on average between 145 and 189 

percent annually. 

As you can all see, there are many different aspects to this law. I’m excited for 

today’s hearing though because it’s a great opportunity for us to dive further into 

one particular area: Obamacare’s impact on jobs. One of my top priorities in Congress is getting Kentuckians back to work, and I believe that Obamacare stands 

firmly in the way of this goal. 

As I have traveled around the Sixth District and spoken with employers throughout central and eastern Kentucky, a consistent theme I’ve heard is employers citing 

Obamacare as creating a severe chilling effect on their ability to retain and hire employees. And this is certainly not a sentiment exclusive to Kentucky. A March report 

from the Federal Reserve specifically stated, ‘‘Employers in several Districts cited 

the unknown effects of the Affordable Care Act as reasons for planned layoffs and 

reluctance to hire more staff.’’ Further, According to a study by the National Federation of Independent Business, an employer mandate like the one included in 

Obamacare could eliminate over one million jobs! 

In addition to the lost jobs, there are also significant concerns with how 

Obamacare will lead to shifting more and more full-time workers to a part-time 

basis or to 29 hours. While this may seem odd and counterproductive, the law is 

unfortunately forcing employers to get creative in order to free themselves from its 

mandates and higher costs. 

The bottom line is that Kentucky’s workers, families, and job creators deserve permanent relief from Obamacare, not a one year reprieve. I am hopeful that this hearing can play a constructive role in the process by shining a spotlight on the need 

to provide permanent relief from Obamacare. I look forward to hearing from the witnesses and again thank them for coming today to share their story. 

Chairman ROE. I thank the gentleman for yielding. 

Pursuant to Committee Rule 7(c), all members will be permitted 

to submit written statements to be included in the permanent 

CEWDOCROOM with DISTILLER

12 

hearing record. And without objection, the hearing record will remain open for 14 days to allow such statements and other extraneous material referenced to during the hearing to be submitted for 

the official hearing record. 

[The information follows:] 

Chairman ROE. We have two distinguished panels of witnesses 

today, and I would like to recognize Mr. Brett Guthrie to introduce 

our first witness. 

Mr. GUTHRIE. Thank you very much. I would introduce someone, 

a car dealer, Gary Force Honda, who is a dear friend of mine. His 

parents are my neighbors. His name is Tim Kanaly, and I welcome 

him here. He has Gary Force Honda in Bowling Green. 

Mr. KANALY. Thank you, Congressman. 

Chairman ROE. I thank the gentleman. Now, I would like to recognize Mr. Andy Barr to introduce our remaining witnesses. 

Mr. BARR. Thank you, Mr. Chairman. 

Mr. Joe Bologna is owner of John Bologna’s Italian Pizzeria and 

Restaurant in Lexington, Kentucky. Mr. Bologna has been a restaurateur since 1973, and I will state for the record you have the 

best garlic bread sticks in town. And that might be a bipartisan 

sentiment, I will say. 

Ms. Carrie Banahan is the executive director of the Office of 

Kentucky Health Benefit Exchange in Frankfort, Kentucky. Ms. 

Banahan is a graduate of the University of Louisville and has over 

30 years of experience in State government. 

Mr. John Humkey, our final witness on the first panel, is president of Employee Benefit Associates in Lexington, Kentucky. Mr. 

Humkey is a native of Lexington and began his career in insurance 

in 1977 after graduating from the University of Kentucky. 

Thanks to all of the witnesses for being here. 

Chairman ROE. Okay. Before I recognize you to provide your testimony, let me briefly explain our lighting system. You have 5 minutes to present your testimony. When you begin, the light in front 

of you will turn green, when 1 minute is left, the light will turn 

yellow, and when your time has expired, the light will turn red, at 

which point I will ask you to wrap up your remarks as best you 

can. 

After you have testified, the members will each have 5 minutes 

to ask questions, and the chairman will try to also adhere to the 

5-minute rule. We will not interrupt you right in the middle, but 

we have two panels, so it should be a long morning. 

I will now open it to Mr. Kanaly. 

STATEMENT OF TIM KANALY, OWNER AND PRESIDENT, GARY 

FORCE HONDA, BOWLING GREEN, KENTUCKY 

Mr. KANALY. Thank you. A year ago I started having some concerns about the Affordable Health Care law. I own 50 percent of 

Gary Force Honda located in Bowling Green, Kentucky, and 50 percent of Dixie Auto Sales in Louisville, Kentucky. 

We currently have 46 employees at Gary Force Honda and 6 employees at Dixie Auto Sales in Louisville. I did not know that because of my joint ownership in the two companies if they would be 

grouped together for the Affordable Health Care law. If they were 

CEWDOCROOM with DISTILLER

13 

put together, it would put us over the 50-employee threshold and 

require us to furnish insurance to both groups of employees. 

We currently pay 100 percent of the insurance costs for the employees at Gary Force Honda in Bowling Green. We are unable at 

this time to furnish health insurance to the employees at Dixie 

Auto Sales in Louisville. We would like to be able to furnish insurance to the employees at Dixie Auto Sales at some time in the future, but being a new business, we cannot do it at this time. 

I started looking for clarification on this issue by calling our 

group health insurance provider. After a couple of weeks they got 

back in touch with me. I was told that they have an expert that 

they could hire to advise me on the rules and regulations of the 

new health care law. I read their opinion on my situation and really got no definite answer. 

I then asked my agent what he thought I should do. He told me 

to contact an attorney that specializes in these matters. I said that 

sounds good, could you refer me to one? He got back to me after 

a couple of weeks and said they did not have one they could recommend. 

After asking around and trying to do some research on my own, 

someone recommended that I contact my accountant since the IRS 

would have a hand in implementing this new law. My accountant 

reviewed the regulations and gave me his opinion. He started his 

opinion by saying it was his best guess. He could not guarantee 

that any of the information he was giving me was correct. 

He seems to think that the Affordable Care Act follows the same 

guidelines as the Family Medical Leave Act, and my two companies 

would be considered separate. He is the only person that I have 

talked to that would even give me an educated guess. I do not feel 

real good about his confidence on this subject, but I appreciated his 

effort. 

I kind of tabled the issue until I was contacted by someone in 

Congressman Guthrie’s office. I was referred to him by my insurance agent as someone who was having issues understanding the 

Affordable Healthcare Act. I explained this issue and some other 

concerns that I had with the new law. 

I asked him to please give me the name and number of someone 

in the HHS or the IRS that could give me a definitive answer to 

my questions. After a couple of weeks, he called me back and he 

told me that with all the resources available to him, he could not 

give me anyone or even the right government agency to call. 

In closing, I think there are serious questions about these huge 

changes. It concerns me deeply that no one can even answer my 

most basic questions. 

Thank you. 

[The statement of Mr. Kanaly follows:] 

Prepared Statement of Tim Kanaly, Owner and President, Gary Force 

Honda 

A year ago I started having some concerns about the Affordable Health Care law. 

I own 50% of Gary Force Honda located in Bowling Green, Ky and 50% of Dixie 

Auto Sales in Louisville, Ky. We currently have 46 employees at Gary Force Honda 

and 6 employees at Dixie Auto Sales in Louisville. I didn’t know that because of 

my joint ownership in the two companies they would be grouped together. If they 

were put together it would put us over the 50 employee threshold and require us 

to furnish insurance to both groups of employees. We currently pay 100% of the inCEWDOCROOM with DISTILLER

14 

surance cost for the employees at Gary Force Honda in Bowling Green. We are unable at this time to furnish health insurance to the employees at Dixie Auto Sales 

in Louisville. We would like to be able to furnish insurance to the employees at 

Dixie Auto Sales at some time in the future but being a new business we can’t do 

it at this time. 

I started looking for clarification on this issue by calling our group health insurance provider. After a couple of weeks they got back in touch with me. I was told 

that they have a expert that they have hired to advise them on the rules and regulations of the new health care law. I read their opinion on my situation and really 

got no definite answer. I then asked my agent what he thought I should do. He told 

me to contact a attorney that specializes in these matters. I said that sounds good, 

could you refer me to one. He got back to me after a couple of weeks and said they 

didn’t have one they could recommend. 

After asking around and trying to do some research on my own, someone recommended that I contact my accountant since the IRS would have a hand in implementing this new law. My accountant reviewed the regulations and gave me his 

opinion. He started his opinion by saying it was his best guess. 

He seems to think that if the Affordable Care Act follows the same guidelines as 

the Family Leave Act my two companies would be considered separate. He is the 

only person that I’ve talked to that would even give me a educated guess. 

I didn’t feel real good about his confidence on this subject but I appreciated his 

effort. 

I kind of tabled the issue until I was contacted by someone in Congressman Guthrie’s office. I was referred to him by my insurance agent as someone who was having 

issues understanding the Affordable Care Act. I explained this issue and some other 

concerns that I had with the new law. I asked him to please get me the name and 

number of someone in the HHS or IRS that could give me a definitive answer to 

my questions. After a couple of weeks he called me back and told me that with all 

the resources available to him he couldn’t give me anyone or even the right government agency to call. 

In closing I think there are serious questions about these huge changes. It concerns me deeply that no one can even answer the most basic questions. 

Chairman ROE. Thank you very much for your testimony. 

Mr. Bologna? 

STATEMENT OF JOE BOLOGNA, OWNER, JOE BOLOGNA’S 

ITALIAN PIZZERIA AND RESTAURANT, LEXINGTON, KENTUCKY 

Mr. BOLOGNA. Thank you for letting me be here. 

Just a little background on myself. I was born on April 23rd, ’45, 

in Detroit, Michigan. I always loved to cook at home, and my 

grandmother was a fantastic cook, and my grandfather was a small 

businessman that only finished third grade, but had a business 

mind. I hope I have a little part of each of them. 

At 17, I cooked at a little fast food place, and I always had a 

dream of owning my own restaurant since I was 16. I cooked in the 

Air Force from ’65 to ’69, and cooked for as many as 3,000 and as 

few as one, I was a general’s aide in Vietnam. 

My first job after being discharged from the service was at Matthew’s Roast Beef, so I needed to learn how to manage. The second 

job, I went to management training school at Big Boy’s in Michigan, and every place I have worked has been a part of my restaurant today. 

I moved to Lexington in ’72, and then I opened Joe Bologna’s 

Restaurant and Pizzeria, and I have been in total food service for 

54 years, and I am currently president and manager of Joe 

Bologna’s. 

When I started in 1973, I always cared about employees, and 

there were employees that made more than I did when I started 

being that I was working 16 hours a day, and figured I worked for 

CEWDOCROOM with DISTILLER

15 

a dollar an hour. I have always had health insurance. It has been 

important to me and important to take care of employees. For fulltime, I paid 100 percent, and have always offered full-time employees 50 percent that I would pay for it from the beginning. And I 

probably have 30 full-time and 35 part-time. I do not think I have 

ever more than 10 total employees on healthcare. 

Sort of like the recession of ’92, restaurants across the country 

and bars dropped 25 percent in sales, and they are now recovering. 

This is one of the first places customers and families cut under 

budget when the economy is not good. You cannot afford to go out 

to eat and go to bars, so. 

And in passing this bill, the ultimate cost to the customer would 

be less people can go out to eat, and have already lost money in 

the last 2 years. Adding healthcare would put a lot of business out. 

And today, you know, it takes a lot of money today to start up 

a business, and a lot of independents go under quick. A very small 

percentage survives. So why expand and putting in the risk and 

going in debt? 

In 2007, we had 75 employees. At the beginning of 2013, we had 

30 full-time employees and 38 part-time. And the idea we came up 

with is we closed on Mondays and reduced our total employees 

from 54 to 46 or 47. By taking all the part-times and adding them 

together and dividing that by 30 hours reduced us down to 47. 

And I have talked to plenty of customers. A lot of times I am 

over there on Monday, and they talk to me about it. And they cannot blame us for doing what we are doing and understand. And 

hopefully later on if this changes, we will go back opening on Monday. 

I feel Affordable Care causes fewer jobs because I am going to 

try to keep under that 50, and jobs are the biggest problem today. 

So we want to hire people. 

If healthcare is to be fair, then it should be fair for everybody, 

no exceptions. I am for healthcare, but I think it should be the 

same from top to bottom. The government has not provided us with 

guidelines whatsoever, yet we are expected to follow them, and you 

have to try to find it yourself, and clear and compute information 

with unavailable rules, incomplete, and changing. 

The Affordable Care does not into account varying hours and 

work per week. You might work 25 hours one week, and 35 hours 

another week to average 30 hours to equal full-time. We wind up 

being too low. It would be good to ask for solutions to healthcare 

issues, ones that are practical and affordable. 

If this bill passes the way it is, looking out for employees—most 

employees live week to week, will have less money in their paychecks to spend, and will spiral the economy backwards. And it will 

be bad for all businesses because they are not going to have enough 

extra money to spend, whether it is going out to dinner or buying 

those extra things, even grocery shopping. 

And I was thinking about it last night, and I was saying my 

grandfather came here in 1910 and worked 6 days a week from 

5:00 a.m. until 6:00 p.m. And my grandmother had 11 kids at 

home, born in the home with no insurance at all. My grandfather 

worked hard to provide for them without insurance. And I think 

our country needs to really look at what our parents and grandCEWDOCROOM with DISTILLER

16 

parents did, and why our healthcare is like it is today. And that 

would be it. 

Thank you. 

[The statement of Mr. Bologna follows:] 

Prepared Statement of Joe Bologna, Owner, Joe Bologna’s Italian Pizzeria 

and Restaurant 

Health insurance has always been important to me. I already pay health insurance for full time managers and offer to pay fifty percent for full time employees 

who want it. I currently have thirty full time and thirty five part time employees. 

The recession of the last six years has taken a toll on restaurants and bars. This 

is one of the first places customers & families cut out of their budgets. Passing off 

cost to customer would mean less people can go out to eat for me and a lot of other 

restaurants. Have already lost money for last two years. Adding health care cost 

would put a lot of us out of business. 

Why expand taking the risk of putting yourself in debt? In 2010, we had 75 employees. At the beginning 2013 we had thirty full time employees and thirty eight 

part time (24 FTE) so we closed on Mondays, to get below SO FTE. In 2010 we had 

73 employees. This does not count all the administration cost of A.C.A. 

The affordable care act causes fewer jobs. Jobs are the biggest problem today. If 

health care is to be fair It should be the same for everybody. No exception. 

The government hasn’t provided us with any guidelines whatsoever, yet we are 

expected to follow them. Have to try to find info yourself, clear and complete information unavailable -rules incomplete and changing. 

A.C.A does not take Into account restaurant’s varying hours worked per week. Example: EE works 25 hours (P/T) one week, 35 another (F/T) 30 hours== full time. 

TOO LOW. 

Would be good to ask for solutions to health insurance issues - ones that are practical and affordable. 

Chairman ROE. Okay. Thank you, sir. And, first of all, thank you 

for your service as a fellow veteran of the 2nd Infantry Division, 

and I know Mr. Guthrie is. We thank you for your service to our 

country. 

Ms. Banahan? 

STATEMENT OF CARRIE BANAHAN, EXECUTIVE DIRECTOR, 

OFFICE OF THE KENTUCKY HEALTH BENEFITS EXCHANGE, 

FRANKFORT, KENTUCKY 

Ms. BANAHAN. Mr. Chairman and members of the Committee, 

my name is Carrie Banahan. I am the executive director of the Office of the Kentucky Health Benefit Exchange. I, along with members of my staff, have been given the responsibility by Governor 

Beshear to create a State-based exchange in Kentucky. 

At the outset, let me say that I am not a lawyer, an actuary, a 

doctor, or an economist. I am a 30-year veteran of State government, with expertise in the areas of health insurance and Medicaid. However, because of the work conducted by our office, I believe that the Affordable Care Act will provide substantial opportunities to improve the health of the people of the Commonwealth. 

Kentucky ranks 44th overall in health status when compared to 

other states, so there is much improvement to be made. To exacerbate an already troublingly unhealthy environment, an estimated 

640,000 Kentuckians lack healthcare coverage. That translates to 

1 in every 6 Kentuckians. 

A multitude of State and national studies have demonstrated a 

direct correlation between healthcare coverage and health status. 

CEWDOCROOM with DISTILLER

17 

Getting the healthcare coverage that Kentuckians need is critical 

to improving the health of our citizens and our Commonwealth. 

Individuals without insurance are more likely to skip regular 

checkups, go without prescription medicines, and delay doctor visits 

until serious problems develop. As a result, they are more likely to 

seek treatment in an emergency room when their problems are 

more advanced and treatment is more difficult and more costly. 

Children without health insurance are more likely to have unmet 

medical needs like untreated asthma and diabetes. They are also 

more likely to go for long periods of time without seeing a doctor, 

which means they do not get regular checkups for immunizations, 

preventive care, and the vision and hearing tests they need for 

healthy development. 

In addition to the obvious health toll, being without insurance 

can also spell financial disaster for individuals and families, especially in a poor State. Without health insurance, patients must 

cover 100 percent of their medical costs, which can quickly add up. 

And just one visit to the emergency room can put a deep hole in 

the household budget for an individual or family. In fact, nearly 

two-thirds of all bankruptcies are linked to serious illness. 

A critical step in making healthcare accessible to all Kentuckians 

was Governor Beshear’s decision to establish a State-based health 

benefit exchange, which we are calling kynect, Kentucky’s 

Healthcare Connection. 

Education and outreach efforts for kynect are ongoing. Perhaps 

you have watched our television commercials, seen our print ads, 

or heard our radio spots. These efforts will ramp up as we move 

towards open enrollment on October 1st. If you have not already, 

I encourage you to visit our website at kynect.ky.gov. 

In addition to paid advertisements, our office is doing a considerable amount of direct consumer engagement through our kynect 

mobile tour. We just completed 10 days at the Kentucky State Fair, 

during which we handled thousands of questions from interested 

consumers who were eager to learn more about the Affordable Care 

Act and how it will benefit them. 

Beginning October 1st, kynect will operate as an online marketplace where individuals and families, as well as small businesses, 

can comparison shop for health insurance based on cost, benefits, 

and quality. It will also allow eligible individuals and businesses to 

receive premium subsidies and tax credits. And through kynect, individuals will also be able to apply and have their eligibility determined for Medicaid and KCHIP. 

The kynect website is one of many ways Kentuckians will also 

be able to select health plans. They will also be able to shop 

through a toll-free contact center, which opened on August 15th, a 

mail-in application, or in person with kynectors. 

Two kynector grant awards were recently awarded to Community Action of Kentucky and the Kentuckiana Regional Planning 

Development Agency. Funding to support the kynectors is also 

being awarded to several agencies within the Cabinet that have established partnerships with local agencies. We will soon be issuing 

another request for proposals to ensure we have a statewide network of kynectors. 

CEWDOCROOM with DISTILLER

18 

Beginning January 1st, a number of significant changes in the 

healthcare coverage of our citizens will come to fruition. We are 

very excited about the possibility for dramatic improvements in 

Kentucky’s health indicators that could result from the changing 

landscape of healthcare in the Commonwealth and our Nation. 

Thank you. 

[The statement of Ms. Banahan follows:] 

Prepared Statement of Carrie Banahan, Executive Director, Office of the 

Kentucky Health Benefits Exchange 

Mr. Chairman and Members of the Committee, 

My name is Carrie Banahan. I am the Executive Director of the Office of the Kentucky Health Benefit Exchange. I, along with members of my staff, have been given 

the responsibility by Governor Beshear to create a state-based exchange in Kentucky. 

At the outset, let me say that I am not a lawyer; an actuary; a doctor; or an economist. I am a 30-year veteran of state government, with expertise in the areas of 

health insurance and Medicaid. 

However, because of the work conducted by our office, I believe that the Affordable Care Act will provide substantial opportunities to improve the health of the 

people of the Commonwealth. Kentucky ranks 44th overall in health status when 

compared to other states, so there is much improvement to be made. 

To exacerbate an already troublingly unhealthy environmental, an estimated 

640,000 Kentuckians lack healthcare coverage. That translates to one in every six 

Kentuckians. 

A multitude of state and national studies have demonstrated a direct correlation 

between healthcare coverage and health status. Getting the healthcare coverage 

that Kentuckians need is critical to improving the health of our citizens and our 

Commonwealth. 

Individuals without insurance are more likely to skip regular checkups, go without prescription medicines and delay doctor visits until serious problems develop. As 

a result, they are more likely to seek treatment in an emergency room, when their 

problems are more advanced and treatment is more difficult and more costly. 

Children without health insurance are more likely to have unmet medical needs 

like untreated asthma or diabetes. They are also more likely to go for long periods 

of time without seeing a doctor, which means they do not get regular check-ups for 

immunizations, preventive care, and the vision and hearing tests they need for 

healthy development. 

In addition to the obvious health toll, being without insurance can also spell financial disaster for individuals and families, especially in a poor state. Without 

health insurance, patients must cover 100% of their medical costs, which can quickly add up. And just one visit to the emergency room can put a deep hole in the 

household budget for an individual or family. In fact, nearly two-thirds of all bankruptcies are linked to serious illness. 

A critical step in making healthcare accessible to all Kentuckians was Governor 

Beshear’s decision to establish a state-based health benefit exchange, which we are 

calling kynect, Kentucky’s Healthcare Connection. 

Education and outreach efforts for kynect are ongoing. Perhaps you have watched 

our television commercials, seen our print ads or heard our radio spots. Those efforts will really ramp up as we move toward open enrollment on October 1. If you 

have not already, I also encourage you to visit our website at kynect.ky.gov. 

In addition to paid advertisements, our office is doing a considerable amount of 

direct consumer engagement through our kynect mobile tour. We just completed 10 

days at the Kentucky State Fair, during which we handled thousands of questions 

from interested consumers who were eager to learn more about the Affordable Care 

Act and how it will benefit them. 

Beginning October 1, kynect will operate as an online marketplace where individuals and families, as well as small businesses, can comparison shop for health insurance based on cost, benefits and quality. It will also allow eligible individuals and 

businesses to receive premium subsidies and tax credits. And through kynect, individuals will also be able to apply and have their eligibility for Medicaid and KCHIP 

determined. 

The kynect website is one of many ways Kentuckians will also be able to select 

health plans – they will also be able to shop through a toll-free contact center, which 

opened on August 15; a mail-in application or, in person with kynectors. 

CEWDOCROOM with DISTILLER

19 

Two kynectors grant awards were recently awarded to Community Action of Kentucky and the Kentuckiana Regional Planning Development Agency. Funding to 

support the kynectors is also being awarded to several agencies within the Cabinet 

that have established partnerships with local agencies. We will soon be issuing another request for proposals to ensure we have a statewide network of kynectors. 

Beginning January 1, 2014, a number of significant changes in the healthcare coverage of our citizens will come to fruition. We are very excited about the possibility 

for dramatic improvements in Kentucky’s health indicators that could result from 

the changing landscape of health care in the Commonwealth and our nation. 

Thank you. 

Chairman ROE. Thank you for yielding back. 

I am not going to tolerate these outbursts. I am going to have 

you removed if this continues. I want you to understand that. We 

are in a congressional hearing, and this is not a town hall. I will 

say it again one more time, and I am not going to say it after that. 

Be respectful to everyone up here. 

Mr. Humkey? 

STATEMENT OF JOHN HUMKEY, PRESIDENT, EMPLOYEE 

BENEFIT ASSOCIATION, INC., LEXINGTON, KENTUCKY 

Mr. HUMKEY. I would like to thank you, Chairman Roe, Ranking 

Member Andrews, Congressmen Barr, Guthrie and Yarmuth, for 

the opportunity to testify about the challenges that many employers in Kentucky will face in the coming months as the Affordable 

Care Act is fully implemented. 

My name is John Humkey. I am the president and founder of a 

benefits insurance agency here in Lexington. My clients are made 

up of individuals, small employers, and large employers. I have 

held a life and health insurance license in Kentucky since 1977. I 

am also a member of the National Association of Health Underwriters, and I am a past president of our local chapter, the Central 

Kentucky Association of Health Underwriters. 

Today I would like to address the impact of the Patient Protection and Affordable Care Act, and, in particular, modified community rating on small employer groups, such as my clients here in 

Kentucky. 

For those not familiar with modified community rating, this part 

of the Affordable Care Act impacts individual and small group 

health plans, employers under 50. This rating model only allows for 

an insured member’s age, tobacco use, family composition, and geographic region to be used in establishing premiums. It eliminates 

the traditional underwriting considerations such as health status, 

gender, and, for groups, their industry. 

So let me expand on some of these considerations. First, age. 

Currently, an insurer is allowed—excuse me—for a spread in premiums using a 5 to 1 ratio. To simplify, a male, age 25 may have 

a premium of $100 a month, and a male age 64 would be charged 

$500 a month; thus, a 5 to 1 ratio from the highest premium to 

lowest premium is charged. 

The Affordable Care Act compresses this to a 3 to 1 ratio; thus, 

forcing younger insureds to subsidize a premium reduction for 

older insured members. Currently there is a bill before Congress, 

H.R. 544. It is a piece of bipartisan legislation introduced by Representatives Phil Gingrey, Republican of Georgia, and Jim Matheson, Democrat of Utah. It seeks to address this Affordable Care Act 

CEWDOCROOM with DISTILLER

20 

reduction of compression rates. It does allow the States the flexibility to change that to a higher ratio, or it defaults a 5 to 1. I 

would encourage each of you to support that bill. 

Second is gender. With the elimination of gender in modified 

community rating, young males can expect that their rates will increase significantly, while younger females, normally charged for 

maternity, will decrease. 

Third, health status. The elimination of health status in modified 

community rating may have the greatest impact on individuals and 

small employer groups purchasing health insurance. In a nutshell, 

healthy individuals and groups may pay more for premiums to subsidize the unhealthy. Individuals will lose significant motivation to 

live a healthier lifestyle, or for an employer to implement wellness 

programs within their company. Why invest dollars to implement 

a wellness program when your employees, who are healthier, thus 

having lower claims, will not impact their premiums? 

Admittedly there are other motivations and considerations to implement wellness programs, but it does take away a significant factor in calculating a rate of return on investment when deciding to 

spend money on implementing a wellness program within your 

company. 

In addition, for modified community rating, for individuals and 

small employer groups, the Affordable Care Act mandates essential 

benefits to be included in health plans. There are 10 essential benefits in all. One that stands out that is not currently included in 

most plans is coverage for pediatric dental and vision. As noble and 

attractive as mandated benefits are, each mandate adds to the cost 

of claims, and, thus, increases premiums insurers must charge 

their customers. 

So let me paint you a picture. The young, young males and the 

healthy will be required to pay significantly higher premiums 

under the Affordable Care Act. The older, young females, and those 

with significant health status or health conditions may pay less in 

premiums. In other words this law, in my opinion, picks winner 

and losers. This may force many young adults and healthy individuals to drop coverage as premiums under the Affordable Health 

Care Act increase or, in some cases, may double. As the young and 

the healthy leave these insured pools, the less healthy will enroll 

for coverage, and as a result, claims and premiums will go up. 

As we move towards full implementation of the Affordable Care 

Act on January 1st, let me share with you some facts and the impact that the Affordable Care Act has on some of my small employer groups. Insurance carriers here in Kentucky have already 

begun to notify agents and brokers, as well as our clients directly 

here in Kentucky, that they may be looking at significant premium 

increases when their plans renew in 2014. It is not necessary to 

name insurance carriers because this trend is universal among the 

carriers. I have clients that have been notified of an increase of 

anywhere from 11 percent to 110 percent. The great majority of 

these rate increases are in the range of 50 to 90 percent. 

I have great clients that provide good benefit packages to attract 

and retain skilled employees. Most of them pay a significant portion of those premiums. Many of those employers treat their employees as family. But next year, many employers in Kentucky and 

CEWDOCROOM with DISTILLER

21 

around the country will face significant premium increases that 

will force them to radically change the way they provide benefits 

to their employees or, in extreme cases, like my client that faces 

a 100 percent increase, may be forced to drop health insurance altogether and send their employees into the exchanges. 

Let me end my testimony with this thought. No matter how fair 

a market reform idea might seem on its surface, it is not at all fair 

if it also prices people out of coverage options. And I submit to you 

that this is what the Affordable Care Act will do to many Kentuckians come January 1. 

Thank you. 

[The statement of Mr. Humkey follows:] 

Prepared Statement of John Humkey, President, Employee Benefit 

Association, Inc. 

I would like to thank Chairman Roe, Ranking Member Andrews and Congressmen 

Barr, Guthrie and Yarmuth, for the opportunity to testify about the challenges that 

many employers in Kentucky will face in the coming months as the Affordable Care 

Act is fully implemented. My name is John Humkey. I am the president and founder of a benefits insurance agency here in Lexington. My clients are made up of individuals, small employers and large employers. I have held a Life and Health Insurance license in Kentucky since 1977. I am also a member of the National Association of Health Underwriters and I am a Past-President of our local chapter – The 

Central Kentucky Association of Health Underwriters. 

Today I would like to address the impact of the Patient Protection and Affordable 

Care Act (ACA) and in particular ‘‘Modified Community Rating’’ on Small employer 

groups (my clients) in Central Kentucky. 

For those not familiar with Modified Community Rating this part of the Affordable Care Act impacts individual and small group (50 employees or less) health 

plans. This rating model only allows for an insured members age (3:1), tobacco use 

(1.5:1), family composition and geographic regions (defined by each state) to be used 

in establishing premiums. It eliminates traditional underwriting considerations such 

as health status, gender & industry code if you are a group. 

So let me expand on some of these considerations. Age – Currently an insurer 

may allow for a spread in premiums using a 5:1 ratio. To simplify, a male, age 25 

may have a premium of $100 per month and a male age 64 would be charged $500 

per month. Thus a 5 to 1 ratio, from the highest to lowest premium charged. The 

ACA compresses this to a 3 to 1 ratio thus forcing younger insured’s to subsidize 

a premium reduction for older insured members. Currently there is a bill before congress – HR 544, a piece of bipartisan legislation introduced by Representatives Phil 

Gingrey (R–GA) and Jim Matheson (D–UT) that seeks to address the impact that 

the ACA’s age-rating rules have on young Americans. Forty-two states nationwide 

now have in place a 5:1 age-band. This bill will change the 3 to 1 ratio that begins 

on January 1st and instead allow states the flexibility to determine their own ageband or default to a 5 to 1 ratio. I would encourage you to support this bill. Gender 

– with the elimination of gender in Modified Community Rating the load for maternity traditionally charged to younger females will now be shared with males. So 

young males can expect their rates to increase significantly in Modified Community 

Rating. Health Status – The elimination of health status in Modified Community 

Rating may have the greatest impact on individuals and small employer groups purchasing health insurance. In a nut shell healthy individuals and groups will pay 

more in premium to subsidize the unhealthy. Individuals will lose a significant motivation to live a healthier lifestyle or for an employer to implement wellness programs within their company. Why invest company dollars to implement a wellness 

program for your employees when healthier employees (i.e. lower claims) will not 

have an impact on their premiums. Admittedly there are other motivations and considerations to implement wellness programs but it does take away a significant factor in calculating a return on investment (ROI) when deciding to spend money on 

implementing a company wellness program. 

In addition to Modified Community Rating for individuals and small employer 

groups the ACA mandates certain ‘‘Essential Benefits’’ be included in health plans. 

There are ten Essential Benefits in all. One that stands out that is not currently 

included in most health plans is coverage for Pediatric Dental & Vision. As noble 

CEWDOCROOM with DISTILLER

22 

and attractive as mandated benefits are each mandate adds to the cost of claims 

and thus increases the premiums insurers must charge their customers. 

So let me paint you a picture . . . . The young, young males and the healthy will 

be required to pay significantly higher premiums under the ACA. The older, young 

females and those with significant health conditions may pay less in premium. In 

other words this law in my opinion picks winner and losers. This may force many 

young adults and healthy individuals to drop coverage as premiums under the ACA 

double. As the young and healthy leave these insured pools the less healthy will enroll for coverage and as a result claims and premiums will go up. 

As we move with the full implementation of the ACA on January 1, 2014 let me 

share with you some facts and the impact of the ACA upon some of my small employer groups. Insurance Carriers here in Kentucky have already begun to notify 

agents and brokers, as well as our clients directly that many of them will be looking 

a significant premium increases when their plans renew in 2014. It is not necessary 

to name the insurance companies because this trend is universal among carriers. 

I have clients that have been notified of an increase from 11% to a high of 110%. 

The great majority of these increases are in the range of 50% to 90%. 

I have great clients that provide good benefit packages to attract and retain 

skilled employees. Most pay a significant portion of these premiums. Many treat 

their employees as family. But next year many employers in Kentucky as around 

this country will face significant premium increases that will force them to radically 

change the way they provide benefits to their employees or in extreme cases like 

my client that is facing a 110% increase, may be forced to drop health insurance 

altogether and send their employees into the exchanges. In speaking with my client 

that is facing the 110% increase in his health insurance premiums next year this 

small employer had some very colorful words to express his dismay that I will not 

repeat in my testimony today. He is now faced with significantly changing the benefits he now provides his employees or worst dropping coverage altogether. 

Let me end my testimony with this thought: ‘‘No matter how fair a market reform 

idea might seem on its surface, it’s not at all fair if it also prices people out of coverage options’’. This is what the Affordable Care Act will do to thousands of Kentuckians on January 1st. 

Chairman ROE. Thank you, Mr. Humkey. And our first questions 

will be Mr. Guthrie. 

Mr. GUTHRIE. Thank you very much. Thank you, Mr. Chairman, 

for yielding. 

And, first of all, I want to say I know on this committee when 

we are in Washington quite often, Secretary Sebelius, I mentioned, 

Health and Human Services, came up and testified in front of our 

committee. And my understanding, if I did not miss this—I got in 

late last night from Breckinridge County, but I saw, I think, her 

father had passed away who was a governor of Ohio in the 70s. So 

our thoughts and prayers are with Kathleen Sebelius as she is 

going through a tough time now. 

When I was, you know, looking at, you know, employers here and 

I was hearing some of the comments coming from the audience as 

people were talking, employers that I talk to, well, they are distressed. They really are distressed not just about how it affects 

their business, but how this business affects their employees. And 

I understand from your testimony how you have rearranged and 

given less time, Mr. Bologna. And I know I have talked with Tim 

several times, Mr. Kanaly, about his business, just the stress about 

how it has forced him to make decisions that change the earning 

power of their employees. 

I mean, it is not something that, well, we have just got back off 

and not put more money in my pocket. They are truly distressed 

about, particularly in competitive retail environments, staying in 

business or making decisions that are adversely affecting their employees. And that is what you see. 

CEWDOCROOM with DISTILLER

23 

And with you, Mr. Kanaly, I know we have talked several times 

about your 46 plus 6, and we cannot get you an answer because 

we cannot get an answer from the people who are administering 

the rules. 

But if you are ruled to have 52 employees, what decisions does 

that force you to make? And if you are able to stay separate and 

you are Gary Force, that is 46, what does that limit you on growth? 

Mr. KANALY. Well, what we would have to do is once we get an 

answer and somebody tells us exactly where we stand, I really, to 

be honest with you, Congressman, I do not know. We have to wait 

and see until that decision is made, and then we could take a look 

at all of our expenses and decide what we do going forward. 

Mr. GUTHRIE. The 1-year delay, has that helped you, and has it 

brought more uncertainty? 

Mr. KANALY. I do not think it changes anything. I started on this 

sometime last fall. I mean, somebody brought it up to me at the 

barbershop and other places that I go. I have run into a couple of 

other small business people. One guy had a bunch of assisted care 

facilities, and we just started talking about it. It kind of gets you 

talking, so everywhere we go we ask, you know, does anybody have 

anybody who can give you answer. And like I said in my testimony, 

so far I have not found anybody. 

So I am kind of on hold, to be honest with you, until I find out 

where I stand. 

Mr. GUTHRIE. That is creating a lot of uncertainty in the marketplace, I know, by not just knowing the answer to these questions. 

And, Mr. Bologna, in your testimony, you describe you have 30 

full-time and 34 part-time? 

Mr. BOLOGNA. Yeah. 

Mr. GUTHRIE. And you are having to reschedule, is it you do the 

Mondays off so you can get to the 34 part-time, is that— 

Mr. BOLOGNA. Well, what we have done is being closed on Monday, of course, reduces the amount of employees for the whole 

week. So we took all the 34 part-time, and you add all those parttimes together and divide it by 30, which is considered a full-time 

work week. And that brought us down from 34, to an average of 

24. 

And that reduces the total number of what they call full-time at 

30 hours, because most employees I have got work two jobs because 

30 hours a week is not going to make a living. 

Mr. GUTHRIE. And then, so Mr. Humkey, in your testimony, you 

mentioned that businesses are considering dropping insurance coverage in the next year due to the premium increases. And what 

pressures will they be able to maintain, because you deal with a 

lot of small individual businesses. 

Mr. HUMKEY. Correct. 

Mr. GUTHRIE. And the $2,000 tax that you can pay in lieu of providing insurance versus dropping the cost of insurance. 

So what are the incentives for employers to—the question is and 

one of the concerns about the law is so many people putting people 

into the exchanges. The estimates of the law, which is, you know, 

a trillion dollars already, would just be completely blown out because of people dumping people into the exchanges because of the 

costs. 

CEWDOCROOM with DISTILLER

24 

What is the incentive with the $2,000 tax set up? 

Mr. HUMKEY. That tax you are talking about, the $2,000, or it 

could be $3,000 as part of the pay or play penalty, but that is imposed on large employers only or what we define as 50 plus today. 

When you look at the small employee marketplace, certainly it 

is the rate pressure upon employers to operate again in a very lean 

economy and very competitive times to try to take a 50 percent increase or an 80 percent increase and work those costs into their 

cost of operations. 

I think most are going to make tough decisions to either pass 

that cost onto employees or pass part of that cost onto employees, 

or radically change their benefit plans. And even the Affordable 

Care Act in the small marketplace does put a limit on the deductible and out of pocket costs that you can have in a plan, again, further pressure. You cannot go too high with those deductibles and 

out of pockets. The law will not allow it. Yet as we force these 

plans on them, those premiums also become a complication. They 

also increase exponentially. 

Mr. GUTHRIE. You say a lot of small businesses with less than 

15 employees. Well, that is who you deal with. They were all for 

health insurance. 

Mr. HUMKEY. Correct. 

Mr. GUTHRIE. And their pressure will be to, as the premium goes 

up to put some people in the exchange. And they do it without the 

tax. 

Mr. HUMKEY. If they find that it is unaffordable to continue to 

provide employees healthcare, yes, the one option is to cancel the 

coverage and send them to the exchanges. 

Mr. GUTHRIE. I think I see my time has expired. Thank you. 

Chairman ROE. Mr. Yarmuth? 

Mr. YARMUTH. Thank you, Mr. Chairman. Since I only have 5 

minutes, I want to make a couple of quick points. 

First of all, Mr. Kanaly and Mr. Bologna, as I mentioned in my 

opening statement, some of the regulations that relate to the issues 

you have raised have not been finalized yet. And the administration is considering safe harbors for particular industries like yours, 

Mr. Bologna. 

Since you are also my constituent, Mr. Kanaly, on Dixie Highway, I wish you had called me. We would have given you, I think, 

a little bit better information. We have arranged, by the way, for 

a person at IRS to talk to you about the issue, including whether 

you are considered jointly or separately your 2 businesses. 

But even if you are considered jointly, the impact on you will be 

virtually nil because you do not have to cover 5 of the 6 employees 

you have in Louisville, which means you would have no additional 

cost under the act. So I hope that makes you feel better. 

Mr. Humkey, I want to make two points. First of all, I disagree 

with you totally about gender discrimination. You know, women do 

tend to get pregnant, but men also have something to do with that. 

[Laughter.] 

Mr. YARMUTH. And the idea that women should be charged up 

to 80 percent more than men for the same coverage, to me, is fundamentally unfair. 

CEWDOCROOM with DISTILLER

25 

And I was a small business person before I got into politics. I ran 

a business with about 20 employees. Virtually all of them were 

very young and healthy. We had one middle-aged woman who had 

cancer. So every year we were facing premium increases of 20 percent, 25 percent, dealing with the types of issues you talk about. 

And so, the question of fairness is a curious one because to me 

that was very unfair that all of those young people either had to 

adjust their co-pays, their deductibles, and so forth, or raise their 

contributions because of one unhealthy employee. 

So going back to what I suspect you are suggesting to the preAffordable Care Act situation is something I do not think would 

necessarily solve any of the issues that you raised. And, in fact, in 

2008 and 2009 when we were actually debating the Affordable 

Care Act, premiums across the country were going up 25, 30, 38 

percent in many cases, and that is what this act was designed to 

solve. 

So I do not have a question. I just wanted to raise those points. 

Mr. HUMKEY. I was going to ask if you were asking a question. 

[Laughter.] 

Mr. YARMUTH. No, I was not asking a question. 

Ms. Banahan, thank you for your testimony. And I would like 

you to take a few minutes briefly to walk us through what kynect 

will mean on October 1st, just 5 weeks away, less than 5 weeks 

away. What will Kentuckians experience as they utilize kynect to 

enter the healthcare system, and small businesses, I am sorry. 

Ms. BANAHAN. Right. So individuals as well as small businesses—that would be those who had 50 or less employees—will be 

able to go online using the web-based portal to select health insurance companies. They can also utilize an agent or a kynecter, or 

they can file an application with our contact center. 

Mr. YARMUTH. Okay. I know that the rates that we are expecting 

in the exchange have not been published yet, but there is some experience around the country when talking about increased rates. I 

assume you are familiar with some of the rates that have been 

published across the country, in California, and New York, and Oregon. What has been the experience in terms of the impact on rates 

and the Affordable Care Act would do? 

Ms. BANAHAN. So our rates will be available October 1st. You 

know, we’re in the process—our Kentucky Department of Insurance 

is in the process of reviewing and approving those rates. And they 

will be available probably around October 1st. 

Mr. YARMUTH. But is it not true that where rates have been published in California, and New York, and Oregon, and other States, 

there has been a significant decrease in the rates— 

Ms. BANAHAN. There have been decreases, yes, in some of the 

other States. 

Mr. YARMUTH. In New York as much as 50 percent lower than 

pre-ACA rates, is that not correct? 

Ms. BANAHAN. That is correct. 

Mr. YARMUTH. I am not saying we can expect that we can— 

Ms. BANAHAN. Right. Right. Right, yeah, I mean, you know. 

Mr. YARMUTH.—in Kentucky, but there have been significant reductions in rates actually in other places. 

CEWDOCROOM with DISTILLER

26 

So in order to put this rumor to rest, will kynect be ready on October 1st? Have the tests and reviews been completed? 

Ms. BANAHAN. Certainly. Last week, HHS was in Frankfort conducting our operational readiness review, as well as our implementation review. Kentucky was the first State to have this review, 

and it went extremely well. So they found no major issues. And 

then, today we begin end-to-end user acceptance testings with the 

feds, and Kentucky is the first State to do that. And we will be 

open October 1st, and we will be able to take applications for individual coverage and small employer group coverage. 

Mr. YARMUTH. All right, thank you. 

Thank you, Mr. Chairman. 

Chairman ROE. Thank the gentleman. 

Mr. Barr? 

Mr. BARR. Thank you, Mr. Chairman. 

Mr. Kanaly, in response to my colleague, Mr. Yarmuth’s, comments there, I wanted to get your reaction to the comment, in particular whether or not the delay, the 1-year delay in the employer 

mandate in any way gives you comfort in terms of your grouping 

of your employees and whether or not you are going to have to prepare for the 50-employee threshold employer mandate when it 

comes 1 year down the road. 

Mr. KANALY. Again, I just do not know. By the way, I am not 

a constituent. I actually live in Bowling Green. I appreciate your 

help. 

[Laughter.] 

Mr. KANALY. Anything you can do to help me, I promise you. 

Mr. YARMUTH. Your business is a constituent. 

Mr. KANALY. Yes, sir. Thank you. 

To answer your question, really I do not know. Like I said, like 

I told Congressman Guthrie, I am just going to wait. And it will 

not really change anything. I just need a decision. Once I have that 

decision, then I will move forward. But I really do not know. I am 

going to keep asking questions, and it sounds like I might get an 

answer. 

[Laughter.] 

Mr. BARR. Well, let me ask you this. Does the 50 or more employee threshold, the employer mandate, just generally speaking, 

does it encourage or discourage you from growing a business? 

Mr. KANALY. I cannot really say either way. I would seriously 

consider not doing anything forward and continue to try to stay 

under the 50 if I can. If it is going to be harmful to my businesses, 

I probably would go ahead. I will have to look really hard at it. 

Mr. BARR. Mr. Bologna, thank you for your entrepreneurship in 

the Lexington community for all these years. Thank you again for 

your service to the country and for your really American success 

story. We appreciate you sharing that. 

You mentioned in your testimony that are now closed on Mondays due to the healthcare law. Describe the impact that has had 

on your profitability and also the welfare of your employees. 

Mr. BOLOGNA. Well, you know, for some employees that were 

working just one day, for instance, and have a full-time job besides, 

we had to actually eliminate a couple of employees and sort of force 

them to leave to have fewer employees to balance it out. And inCEWDOCROOM with DISTILLER

27 

come wise, somehow we have got to make up for $20,000 a month 

because we are used to making a higher income and doing a lot of 

volume sales, you know.

So that is slowly coming around, and we will have to work on 

that for the rest of the year to see how that really works out. It 

is too early to exactly tell how it will balance out. 

Mr. BARR. Thank you. Mr. Humkey, a couple of questions. Two 

categories of businesses probably that you work with are the small 

businesses, say, a 10-employee business, and then, say, a 45-employee business. 

First describe the impact that you are seeing in terms of the decision making in the health benefits area, in the healthcare planning area for the medium-sized business, the 45-employee, 48-employee. What impact do you see in terms of those companies in 

terms of their expansion plans? 

Mr. HUMKEY. Certainly the closer you get to 50, Congressman 

Barr, it is on the radar. They do understand the Affordable Care 

Act, if you are over 50 full-time and full-time equivalents will require you to provide both affordable and minimum value coverage, 

or it is going to assess a penalty on you. So they are aware of that. 

They are considering that in whether they grow to exceed that 50 

benchmark that would throw them into a penalty. 

So it is on the radar. They do consider it. Again, as Mr. Kanaly 

said, many of them find it very hard to understand how that calculation is made. I have combed over a lot of information, both 

from the government and from accounting firms, and it is not going 

to be an easy task for an employer to make that calculation. 

Mr. BARR. And I see my time is running out, so I will spare you 

the second part of the question about the small because I think you 

have already testified that there is rate pressure applied even with 

the lower employee number of small businesses because of the 

modified community rating issue. 

But let me ask you a final question with the last bit of time I 

have, and it has to do with the grandfathering provisions. The 

Obama Administration has repeatedly assured employers, like the 

ones that you serve here in central Kentucky, that they did not 

have to worry about their reform plan, that their plans would be 

grandfathered in. That is to say they would not be subject to the 

mandate’s regulations and the minimum essential coverage requirements. 

The Federal regulators are now telling us that only 1 in 5 small 

employers and 1 in 3 large employers will remain grandfathered. 

Please share your view whether the assurances of the grandfather 

provision in Obamacare is truly a safe harbor for employers. And 

if it is not, explain why employers are unable to escape 

Obamacare’s mandates. 

Mr. HUMKEY. Well, I think you are right with the statistics you 

cite. It is very true among my own clients. Very few have retained 

grandfather status, and one of the critical issues is that rates continue to increase even in the last 4 years. To be grandfathered, you 

had to change literally almost nothing. You could have no more 

than a 5 percent change in employer contributions or no more than 

a 5 percent change in some of your benefit design. 

CEWDOCROOM with DISTILLER

28 

So employers were forced to give up their grandfather status just 

to continue to make healthcare affordable for their employees. Very 

few employers are grandfathered, so if you are not grandfathered, 

you are subject to the full extent of the Affordable Care Act, which 

has all the pressures that we have talked about here today. 

And the second part of your question was? The last part? 

Mr. BARR. That was it. Thank you. I yield back. 

Chairman ROE. Thank you for yielding. I will now yield myself 

5 minutes. 

I am Phil Roe. I am from Johnson City, Tennessee, a veteran of 

the United States Army, and I practiced medicine there for 31 

years in rural Appalachia. We started out with four doctors in our 

groups and 12 employees. We now have 100 providers and 450 employees still providing care for rural Appalachia. I also teach in the 

medical school. So I have been involved deeply in healthcare my 

entire adult life. 

And one of the problems with the American healthcare system 

was, number one, it cost too much money. That is why I retired 

from my practice and ran for Congress was I knew I could see patients that could not afford the care they were given. 

Number two, we had people out there who were working every 

day, husband and wife, but they could not afford the care. They did 

not have access to affordable care. 

When you look at the healthcare system in America, you look at 

it in three phases, and then you look at the part that just defined 

those people I just mentioned. And number one, if you are in an 

employer-based ERISA plan, it covers 160 million people, just like 

my office. We provided health insurance just like these businesses 

have forever. Why? Because it is the right thing to do. 

And number two, you want good employees, and this is a good 

way to get that, to attract good employees to your practice. I have 

had people working with me for 35 years in my practice that are 

still there. And why? They are great people to work with. They are 

like family members. 

So we have the ERISA-based plans. Companies over 50 in this 

country, 96 percent provide health insurance coverage right now 

today. So they were not involved. 

Number two, and so preexisting conditions do not matter in 

ERISA-based plans. You have to cover everybody. Number two, I 

am Medicare age now, so when you hit 65 you hit that button. And 

you also do not have a preexisting condition. Number three, if you 

are Medicaid you do not. 

So what group of people are we actually looking at? We are looking at the small group market, and the individual market, and the 

uninsured. Now, what did we do? We passed a 2,700-page bill, 

which I unfortunately have read every word of it, and 28,000 pages 

of rules right now to look at this segment of the population. We 

could have covered two-thirds of everything the Affordable Care 

Act did in two paragraphs. One is the 26-year-olds and expanding 

Medicaid. That would have done two-thirds of what you wanted 

right there, those two items. 

Now, let me talk about just a moment the New York plan dropping. And it did, and let me tell you how that happened. The 1992 

the individual market in New York had 1.2 million people. GovCEWDOCROOM with DISTILLER

29 

ernor Cuomo won, passed a no preexisting conditions, no lifetime 

limits, and caps. So by 10 years later, there were 120,000 people 

in the individual market in a State of 19 and a half million people. 

Today there are 32,000 people. That is why the rates are so high. 

And what you said, Mr. Humkey down there, was when you 

bring these young people in, they are going to pay a lot more to 

lower the rates for a few people in that State. I do not think that 

is fair. There is a better way to do that, and to provide that coverage for those folks, and we go into that. 

I want to talk a little bit, Mr. Humkey, about those small businesses in our State. I have talked to our insurance commissioner. 

In the individual market, the rates are expected to go up 45 to 70 

percent. And I asked her, if we did absolutely nothing, what would 

have happened to the rates. They would have gone up by 10 percent. And the small group market, small business market, about 50 

to 55 percent. 

Are you seeing that here in Kentucky? 

Mr. HUMKEY. Yes. Many insurance carriers are telling them that 

if their plans were to renew in this year, they might be looking at 

single digit 10 percent, 15 percent renewals. 

Chairman ROE. Which is a lot. 

Mr. HUMKEY. Yeah, which in this day and time, if you get a single-digit renewal you are presented, you are pretty fortunate. But, 

yeah, compared to when their plans renew and go into modified 

community rating. 

As I said, there will be winners and losers. There will be some 

groups who have unhealthy or older employees that rates may 

come down, but they are a lot fewer than the employers. These 

rates will go up. 

Chairman ROE. I think that one of the things that was brought 

up earlier that we have to do is in prevention. I have seen certainly 

in preventive care in our district, we had businesses that changed 

the metric for that. In other words, we incentivize wellness, not illness, right now. 

So what are doing, we have seen businesses actually lower rates 

by saying, let us say if you are a diabetic who smokes and you 

change those behaviors, and you lower your hemoglobin A1C to less 

than 60 with good care, that those rates come down. And I think 

those are the kinds of things we need to look at in expanding coverage, a lot of good ideas. 

One other thing I want to mention before my time runs out is 

a part of the market we have not talked about, and that is the selfinsured. Our self-insured people, it is going to cost my city 

$177,000 each year, for which they get absolutely nothing for. And 

what that is a $63 fee-per-person fee that they have to pay for each 

person insured for the first 3 years to help the indemnified insurance companies, which I find remarkable that you are doing that. 

And there is also going to be an exchange fee that they are going 

to have to pay, which I do not know how much money it is. So I 

know it is at least $177,000 debt for my local community where I 

was mayor. 

I see my time has expired. I want to thank the great panel. I 

want to thank the witnesses for taking your time to testify. I will 

CEWDOCROOM with DISTILLER

30 

now ask the second panel to come forward and take your seats. 

Thank you all very much. 

Exactly a 5-minute break. I will be back in 5 minutes. 

[Recess.] 

Chairman ROE. Call the meeting to order. It is my pleasure to 

yield to Mr. Andy Barr to introduce our second panel of witnesses. 

Mr. BARR. Thank you, Mr. Chairman, and thanks to the second 

panel for coming and participating in our hearing here today. 

I would first like to introduce Ms. Janey Moores, president and 

CEO of BJM & Associates in Lexington, Kentucky. Ms. Moores is 

a well-known vocational consultant, who is knowledgeable regarding issues affecting today’s labor market, wages, compensation, and 

current employment trends. She has been a long-time member of 

the National Association of Women Business Owners. 

Mr. Donnie Meadows is the vice president of human resources for 

Food City Stores in Kentucky. Previously, Mr. Meadows worked for 

Walmart in its corporate labor division. 

Ms. Debbie Basham works at the Southwest Breast Cancer 

Awareness Group in Louisville, Kentucky. Ms. Basham works with 

women and families battling breast cancer to coordinate support 

and help ensure access to healthcare resources. 

Mr. John McPhearson is the CEO of Lectrodryer in Richmond, 

Kentucky, a company I have had the pleasure of visiting, and it is 

a great operation down there, great employer in Madison County. 

Lectrodryer dehumidifiers are used by 90 percent of the top 100 industrial firms in the United States. 

I yield back. 

Chairman ROE. I thank the gentleman for yielding, and before I 

recognize you, you have heard this before. But the lighting system 

is you each have 5 minutes to present your testimony, and the light 

will turn green. At 4 minutes, the light will turn yellow. And when 

your time has expired at 5 minutes, it will turn red, and we will 

ask you to wrap up your remarks as best as you can at that time. 

And each member has 5 minutes to ask questions. 

I will start with Ms. Moores. 

STATEMENT OF JANEY MOORES, PRESIDENT AND CEO, BJM & 

ASSOCIATES, INC., LEXINGTON, KENTUCKY 

Ms. MOORES. My name is Janey Moores. I am the President and 

owner of BJM Staffing, BJM Medical Staffing, and Technitron. 

These are all employment services that place people in jobs in professional offices, accounting, law firms, IT professionals, as well as 

my nursing agency, placement in the healthcare field. I have placed 

over 250,000 people in jobs in the last 42 years. 

Let me open by sharing with you the phone call that I received 

last week from my company’s health insurance agent. Our group 

health insurance plan renews each May, so I was surprised to be 

receiving her call so soon after just renewing our premium rate a 

few months earlier. 

She explained to me that I was receiving the same phone call 

that she had made to 78 other businesses before she called me. She 

stated that if we renewed our group before this coming January 1, 

we would only have a 10 percent premium increase. If we wait 

CEWDOCROOM with DISTILLER

31 

until our standard renewal month of May next year, our renewal 

rate will have a 92 percent renewal rate. 

Once I picked myself up off of the floor and started breathing 

again, I asked her what in this world could cause our rate to double after January 1. She explained to me that there is a provision 

in the Affordable Healthcare Act called community rating, and that 

it is having a horrific impact on all private health insurance plans. 

She then reminded me that even if we can get an early renewal 

rate before January 1 that my business is still facing that same gigantic premium increase in another 12 months after we get the renewal. This no doubt will be the death knell for businesses 

throughout the country. 

So I have spoken with all of our business clients and medical facilities, and they are all receiving these same phone calls, and are 

paralyzed with fear about hiring any employees whatsoever. And 

can you blame us? 

What is the true unemployment rate? Well, what we receive in 

government numbers does not reflect people who have been moved 

from the unemployment rolls to the social security disability rolls. 

Once they are on the disability rolls for 2 years, they are moved 

onto the Medicaid rolls where they pay no premiums, no co-pays, 

and no deductibles. 

When you have students who cannot find full-time work, they 

are not counted as unemployed. Any students remaining in school 

after graduation because they cannot find full-time work are not 

counted. And those who have never paid into the unemployment insurance fund, if they have been self-employed, independent contractors, small business owners who have lost their businesses, retirees, who are forced to leave retirement, students who have graduated but still cannot find full-time jobs, people retiring early, 

these people are not counted. 

My own business used to place thousands of people each year in 

some of Kentucky’s finest manufacturers. However, reports have 

shown that Kentucky has lost over a third of our manufacturing 

jobs in the last 10 years, with the largest job loss occurring in the 

last 3 years. Accordingly, my company no longer places manufacturing employees. 

America has a rapid transition now going on from a Nation of 

full-time careers to a Nation of part-time jobs. Even now, the 

longer-term temporary projects that we used to get have disappeared, and we are only asked to fill an occasional short-term 

employee here and there to help only during peak workloads. Also, 

with so many people unemployed now, the few remaining jobs have 

lower wages. 

There has been an alarming increase in the number of Americans now dependent upon disability payments from our government. According to a recent NPR report, every month 14 million 

people now get a disability check from our government. Kentucky 

ranks as the third highest State for the number of residents receiving social security disability payments. 

My own business has had a growing number of our employees 

submitting forms to us to complete for them in order for them to 

quit working and start receiving disability payments. Once we complete those forms they bring to us, they pick them up, and we 

CEWDOCROOM with DISTILLER

32 

never see or hear from them again. Yet people relying on disability 

payments are often overlooked because they are considered not 

part of the labor force and are not counted among the unemployed. 

We have over 128 million Americans now receiving government 

assistance payments each month. My company spends a large and 

growing amount of our time each week completing and returning 

our employees’ government assistance forms for food stamps, housing assistance, disability forms, and more. In addition, my business 

is also forced to spend more and more time responding to our employees’ financial problems relating to their mortgage foreclosures, 

wage garnishments, credit card collections, school loan garnishments, and more. 

My business is open 24 hours a day, 7 days a week, 365 days a 

year trying to find jobs for people, then sending them to work. We 

get excited when we finally do get a job filled, and only to hear, 

well, two of the doctors are taking early retirement now, so our 

practice does not need to hire anyone else. And by the way, we 

would like to send you a couple of our employees’ resumes because 

we are going to be letting them go this week. 

One northern Kentucky taxi cab company stated that they were 

reducing their 20 full-time drivers to part-time schedules and hiring another 20 part-time drivers due to the Obamacare healthcare 

law. 

Over the 42 years that I have been putting people to work, I 

have seen the job market go up and down from time to time. However, in the last few years, the job market has dropped off of a 

huge cliff and is likely to never return. 

So what is different now that was not a factor over the last few 

years? No one can deny that the toxic ingredient in today’s job 

market is the so-called Affordable Healthcare Act. We now have an 

entrenched bureaucracy in the United States that is now the fourth 

branch of our government, and it will be the IRS who will ram the 

Affordable Healthcare Act down everyone else’s throats but their 

own. I never, ever dreamed that I would live to see the day when 

my own government would work day and night to put me out of 

business. 

Esteemed members of the Congress, you see before you a vanishing species, an independent business owner who has paid millions of dollars in taxes to our government and put over 250,000 

Americans to work in first-class careers, only to be threatened with 

total extinction by a single, albeit unconstitutional, law being foisted upon America’s hardworking citizens, we the people. 

Thank you. 

[The statement of Ms. Moores follows:] 

CEWDOCROOM with DISTILLER

33 

CEWDOCROOM with DISTILLER


Insert offset folio 60 here 82448.060
34 

CEWDOCROOM with DISTILLER


Insert offset folio 61 here 82448.061
35 

CEWDOCROOM with DISTILLER


Insert offset folio 62 here 82448.062
36 

CEWDOCROOM with DISTILLER


Insert offset folio 63 here 82448.063
37 

CEWDOCROOM with DISTILLER


Insert offset folio 64 here 82448.064
38 

CEWDOCROOM with DISTILLER


Insert offset folio 65 here 82448.065
39 

CEWDOCROOM with DISTILLER


Insert offset folio 66 here 82448.066
40 

CEWDOCROOM with DISTILLER


Insert offset folio 67 here 82448.067
41 

Chairman ROE. Thank you for your testimony. 

Now, Mr. Meadows? 

STATEMENT OF DONNIE MEADOWS, VICE PRESIDENT OF 

HUMAN RESOURCES, K-VA-T FOOD STORES, INC., ABINDGON, 

VIRGINIA 

Mr. MEADOWS. Chairman Roe, Congressman Yarmuth, Guthrie, 

and Barr, good morning. My name is Donnie Meadows, and I am 

the vice president of human resources with K–VA–T Food Stores. 

And as such, one of my responsibilities is the administration of 

health plan benefits. So thank you for allowing me this opportunity 

to appear here today and to express some of the challenges we are 

facing as we continue to comply with the Patient Protection and Affordable Care Act. 

I will condense my comments to a few key points, but respectfully request that you review the written testimony previously provided. 

K–VA–T Food Stores is headquartered in Abingdon, Virginia. We 

currently operate 106 retail supermarkets, employing over 13,000 

associates throughout the tri-state region of Kentucky, Virginia, 

and Tennessee. Fourteen of our retail supermarkets are located in 

Kentucky where we employ approximately 1,500 associates. 

We were also one of the voices of the Food Marketing Institute 

and the supermarket industry. Food retailers and wholesalers employ about three and a half million workers, many operating under 

fluctuating schedules to meet employees’ needs and consumer demands. Generally, the supermarket industry operates at approximately a 1 percent margin on average, so our industry has been 

diligent in seeking to minimize new burdens associated with implementing regulations and/or changes to the Affordable Care Act to 

allow retailers and wholesalers to continue to provide quality 

healthcare that is affordable to both the employee and to the employer. 

I would like to touch on some of the challenges to food retailers 

and offer support to some proposed solutions that are before Congress and the Administration. 

The Affordable Care Act has defined a full-time employee as 

someone who averages working 30 hours per week for an employer 

to be obligated to offer healthcare coverage. K–VA–T employs a significant number of part-time associates, and those folks are in age 

groups that possibly actually have health coverage from other 

sources, such as their parents or Medicare. At the present time, 67 

percent of our part-time workforce falls into one of two age groups: 

those who are less than age 26 and those who are age 65 and older. 

K–VA–T currently provides health benefits to associates working 

full-time, but a 30-hour per week threshold is beyond what we can 

afford without potentially impacting the quality of coverage offered 

to our current full-time associates. It also impacts how our stores 

hire, how we structure responsibilities, and offer benefits to new 

hourly associates. 

The Affordable Care Act’s 30 hour per week full-time threshold 

does not fit into the realities of supermarkets which operate outside of a traditional 9:00 to 5:00 work schedule. Our stores are 

staffed based on customer needs and those of our associates who 

CEWDOCROOM with DISTILLER

42 

often are seeking flexible work arrangements. Many do not want 

full-time work. 

Earlier this year, the Administration released look back period 

rules in an attempt to reduce those circumstances by tracking and 

averaging out associate hours over a longer period of time, but the 

administration of this is complex. We have developed our systems 

to track the look back periods, and we have conducted training 

with our management staff. And this results in fewer hours for 

some of the part-time associates just to ensure they do not trigger 

additional liabilities associated with working 30 hours or more per 

week, which adds a financial burden for some of those who were 

accustomed to working more hours, and honestly reduces our flexibility to serve customers. 

We support legislation, H.R. bill 2575, introduced and co-sponsored by Chairman Roe and representatives here today, and others 

to address the issue. Frankly, we support any legislation that is 

honestly trying to correct ACA’s definition of full-time and bring it 

in line with what is a more practical work environment. 

Under the Affordable Care Act, when our company offers health 

coverage to our full-time employees, we could still get penalized if 

premium costs of an associate are more than nine and half percent 

of their household income, or if the benefits do not cover at least 

60 percent of the average costs. Regulatory agencies have offered 

some options, such as an affordability tests based upon employee 

wages and a calculator to certify coverage value. But we are still 

awaiting guidance on reporting and interactions with health exchanges to protect against someone being mistakenly awarded an 

ACA tax credit and/or to protect our company from getting penalized even when we have attempted to follow the rules. 

Mandatory auto enrollment is one of the provisions under the Affordable Care Act, and honestly is putting increased administrative 

costs and caused confusion potentially between employers and employees. K–VA–T supports legislation, H.R. bill 1254, that will repeal the mandatory enrollment provision, helping to ensure that 

associates are allowed to opt in to employer-sponsored coverage 

rather than opt out. 

Temporary reinsurance and other fees for employers. The charge 

to our company will be $63 per participant in a benefit year of 

2014. That is over $400,000 in incremental costs and other annual 

costs going forward. And that is on top of some additional fees for 

the Patient-Centered Research Outcome Institute. These new fees 

not only affect our business, but given the low margin environment 

of our supermarket industry, they would eventually directly impact 

our consumers. 

Thank you for allowing me the opportunity to testify. 

[The statement of Mr. Meadows follows:] 

CEWDOCROOM with DISTILLER

43 

CEWDOCROOM with DISTILLER


Insert offset folio 68 here 82448.068
44 

CEWDOCROOM with DISTILLER


Insert offset folio 69 here 82448.069
45 

CEWDOCROOM with DISTILLER


Insert offset folio 70 here 82448.070
46 

CEWDOCROOM with DISTILLER


Insert offset folio 71 here 82448.071
47 

Chairman ROE. Thank you, Mr. Meadows. 

Ms. Basham, you have 5 minutes. 

STATEMENT OF DEBBIE BASHAM, SOUTHWEST BREAST 

CANCER AWARENESS GROUP, LOUSIVILLE, KENTUCKY 

Ms. BASHAM. Thank you for having me, and thank you for what 

everyone is doing. 

Seventeen years ago, I was diagnosed with late third stage 

breast cancer. According to the doctors, the chances of me living 

out my life were slim. After 6 months of chemotherapy, the doctors 

estimated I had 3 months unless we found a miracle. I was 44 

years old. 

Fortunately, my husband’s professional association provided good 

health coverage for our family, and I was accepted into an experimental treatment program for late third stage breast cancer at 

Duke University. When we arrived home 3 months later, I had won 

my battle. The treatment worked. But we faced $200,000 in bills 

to cover costs not paid by the insurance company. 

We were a middle-class American family, and we suddenly realized the cost of breast cancer was not over. We faced down the disease, but with the day-to-day expenses of raising two children, our 

bills kept mounting. My husband spent many hours of his day negotiating bills so we could keep our heads above water and keep 

our insurance paid up. No longer did we have financial security in 

our lives, but I had learned just how important having health coverage meant to my survival. 

I was also beginning to understand the constant state of confusion and fear when dealing with our healthcare system: office visits, hospitals, insurance companies. We would wait for answers. 

Would I be allowed to take the next test or get the pills that I 

needed? We were always calculating to see whether I would reach 

my annual limit and the insurance company would stop paying. 

And our family was not alone. 

That is why 15 years ago I started the Southwest Breast Cancer 

Awareness Group, which is now the largest participating breast 

cancer survivor group in Louisville. And having worked with thousands of women and their families since I beat the cancer, I have 

come to realize that you live or die based on the kind of insurance 

you have. You can get insurance and you can get some treatment 

without insurance, but the kind of treatment that alleviates suffering and saves lives simply is not available unless you have insurance to pay for it. 

I have held crying women in my arms knowing—I knew—they 

were doomed to die because their coverage was not good enough, 

had been cancelled, or because they could no longer afford the skyrocketing premiums, they had reached their limits, or they had 

found themselves reliant on guaranteed-issue policies with outrageous costs, like the one that I ended up with, because when our 

family policy no longer covered me, I was suddenly locked out of 

the system. No insurer would cover me because of my pre-existing 

conditions. The guaranteed-issue plan I eventually obtained 

through Kentucky Access cost me $1,500 a month. With my husband’s care, we were paying at $2,000. 

CEWDOCROOM with DISTILLER

48 

One by one, the women in my group come with their stories and 

their struggles, first medical, then financial. We struggle together, 

we pray together, and we hold on for dear life. I want to tell you 

about a few of these courageous women. 

Karen Blake and her husband, Kevin, owned a small business 

and had a privileged life when she joined our support group. But 

as the cancer came back, her standard of living started to fall, and 

her insurance company questioned life-saving treatments her doctors said that she needed. Her out-of-pocket expenses were very 

overwhelming. She was taking chemo in her doctor’s office when 

she received a bill for $7,000 from the hospital. She called and explained she had not been to their hospital, but because the doctor 

was associated with the hospital, it was treated as if she had been 

admitted. Her insurance company would not pay. Is this the quality care some claim is the envy of the world? 

Lisa was 28 years old and her children’s ages were 2, 4, 6, and 

8. She was a skinny, spunky redhead. She had been diagnosed with 

stage four breast cancer. The doctor found the lump in her breast 

shortly after the birth of her fourth child. Lisa and I talked often 

and had become friends. She would sometimes call me at 2:00 a.m. 

because she could not sleep. She would always say, sorry, is it too 

late, is it okay? I would pray in the silence of my mind for God to 

give me the right words to ease her fears. 

She and her husband lost everything fighting breast cancer, their 

house and their car. They live below the poverty level now, and she 

spoke about how often she was ashamed when she could not pay 

her bills. Early on in our group, Lisa shared her sorrow when she 

thought of leaving her children behind. She always thought I was 

her rock, that I was holding her up, but little did she know her valiant courage made me determined to do something more about 

healthcare in our country. 

I spent the last Christmas of Lisa’s life with her. When we arrived at her rented home, they had moved her bed into the small 

living room and the children all surrounded her, sitting as close on 

the bed as they could get. Children need a mother. Our breast cancer group had sent the children gifts and baked goodies, and sent 

gift cards to help with the expenses. 

The children played and they sang carols with us. Lisa did not 

seem sick that day. We were surrounded by laughter and giggles 

the way an American family should be. Time stood still, and Lisa 

had a wonderful day. As I left her house later on, our eyes met. 

In her beautiful smile I could see a wordless goodbye. I felt her 

strength and courage. Lisa gave a good fight, but in the end, her 

lack of care and the stress of overwhelming bills conspired, and her 

body caved in on top of her. She was never bitter, but she wondered why, and we talked often, why America could not do better 

for those less fortunate. This American girl deserved better. 

So did my friend Carla Norton. Even as breast cancer attacked 

every part of her body, she remained hopeful and brought light into 

our group. Her bare-bones insurance paid for virtually nothing, and 

she told me she knew she was muzzled in the fight for her own life. 

She left behind two teen boys and a mother that was devastated 

emotionally and financially. 

CEWDOCROOM with DISTILLER

49 

As women come in and out of our breast cancer support group, 

I know who will live and who will die based on what kind of insurance they have. I have seen this, oh, so many times. Where medical 

necessity should determine our outcomes in healthcare, greed often 

does instead. 

It has been 17 years since I first beat breast cancer, and yet I 

still cannot find an insurance company that will sell me a policy. 

But because of the Affordable Care Act, that will never again prevent me or the millions of women like me across our country from 

getting the coverage and the care needed. Annual and lifetime limits will no longer shift the tremendous burdens of cancer onto its 

victims. Families will no longer lose out on all the opportunities 

our Nation offers simply because they get sick. 

I only wish this law had gotten here in time for Lisa and Carla 

and the millions of women who deserved more than what they got. 

I am here today for them, and I thank you. 

[The statement of Ms. Basham follows:] 

Prepared Statement of Debbie Basham, Southwest Breast Cancer 

Awareness Group 

Seventeen years ago, I was diagnosed with late 3rd stage breast cancer. According 

to the doctors, the chances of me living out my life were slim. After six months of 

chemotherapy, the doctors estimated I had three months unless we found a miracle. 

I was 44 years old. 

Fortunately, my husband’s professional association provided good health coverage 

for our family, and I was accepted into an experimental treatment program for latestage breast cancer at Duke University. When we arrived home three months later, 

I had won my battle—the treatment worked. But we faced a $200,000 bill to cover 

costs not paid by the insurance company. We were a middle-class American family, 

and we suddenly realized the cost of breast cancer wasn’t over. We faced down this 

disease, but with the day-to-day expenses of raising two children, our bills kept 

mounting. My husband spent many hours of his days negotiating bills so we could 

keep our heads above water and keep our insurance paid up. No longer did we have 

financial security in our lives, but I had learned just how important having health 

coverage meant to my survival. 

I was also beginning to understand the constant state of confusion and fear when 

dealing with our health care system—office visits, hospitals, and insurance companies. We would wait for answers: Would I be allowed to take the next test or get 

the pills I needed? We were always calculating to see whether I would reach my 

annual limit and the insurance company would stop paying. And our family wasn’t 

alone. 

That is why 15 years ago, I started the Southwest Breast Cancer Awareness 

Group, which is now the largest breast cancer survivor group in Louisville. And having worked with thousands of women and their families since I beat my cancer, I 

have come to realize that you live or die based on the kind of insurance you have. 

You can get some treatment without insurance, but the kind of treatment that alleviates suffering and saves lives simply isn’t available unless you have the insurance 

to pay for it. 

I have held crying women in my arms knowing they were doomed to die because 

their coverage wasn’t good enough, had been cancelled because they could no longer 

afford the sky-high premiums, had reached their limits, or had found themselves reliant on guaranteed-issue policies with outrageous costs—like the one I ended up 

with. Because when our family policy no longer covered me, I was suddenly locked 

out of the system: No insurer would cover me because of my pre-existing condition. 

The guaranteed-issue plan I eventually obtained through Kentucky Access cost 

$1,500 per month. 

One by one, the women in my group come with their stories of struggle—first 

medical, then financial. We struggle together, pray together, and hold on for dear 

life. I want to tell you about a few of these courageous women. 

Karen Blake and her husband, Kevin, owned a small business and had a privileged life when she joined our support group. But as her cancer came back, her 

standard of living started to fall, and her insurance company questioned life-saving 

treatments her doctors said she needed. Her out-of-pocket expenses were overCEWDOCROOM with DISTILLER

50 

whelming. She was taking chemo in a doctor’s office when she received a bill for 

$7,000 from the hospital. She explained she had not been to their hospital, but because the doctor was associated with the hospital, it was treated as if she had been 

admitted. Her insurance company would not pay. Is this the quality care some claim 

is the envy of the world? 

Lisa was 28 years old and her children 2, 4, 6, and 8. She was a skinny, spunky 

redhead. She had been diagnosed with Stage 4 breast cancer. The doctor found the 

lump in her breast shortly after the birth of her fourth child. Lisa and I talked often 

and had become friends. She would sometimes call me at 2 a.m. because she 

couldn’t sleep. She would always say, ‘‘Sorry it is so late—is it OK?’’ I would pray 

in the silence of my mind for God to give me the right words to ease her fears. 

She and her husband lost everything fighting breast cancer—their house, their 

car. They lived below the poverty level, and she spoke often about being ashamed 

when she couldn’t pay her bills. Early on in our group, Lisa shared her sorrow when 

she thought of leaving her children behind. She always thought I was her rock, that 

I was holding her up. But little did she know her valiant courage made me determined to do something more about health care in our country. 

I spent the last Christmas of Lisa’s life with her. When we arrived at her rented 

house, they had moved her bed into the small living room and the children all surrounded her, sitting as close on the bed as they could get. Our breast cancer group 

had sent the children gifts, baked goodies, and gift cards to help with their expenses. 

The children played and sang carols. Lisa didn’t seem sick that day we were surrounded by laughter and giggles. Time stood still, and she had a wonderful day. As 

I left her house later on, our eyes met. In her beautiful smile I could see a wordless 

goodbye. I felt her strength and courage. Lisa gave a good fight. But in the end, 

her lack of care and the stress of overwhelming bills conspired, and her body caved 

in on top of her. She was never bitter, but she wondered why America couldn’t do 

better for those less fortunate. This American girl deserved better. 

So did my friend Carla Norton. Even as breast cancer attacked every part of her 

body, she remained hopeful and brought light to our group. Her bare-bones insurance paid for virtually nothing, and she told me she knew she was muzzled in the 

fight for her life. She left behind two teen boys and a mother—devastated emotionally and financially. 

As women come in and out of our breast cancer support group, I know who will 

live and who will die based on what kind of insurance they have. Where medical 

necessity should determine our outcomes in health care, greed often does instead. 

It has been 17 years since I first beat breast cancer, and yet I still can’t find an 

insurance company that will sell me a policy. But because of the Affordable Care 

Act, that will never again prevent me or the millions of women like me across our 

country from getting the coverage and care we need. Annual and lifetime limits will 

no longer shift the tremendous cost burdens of cancer onto its victims. Families will 

no longer lose out on all the opportunities our nation offers simply because they get 

sick. 

I only wish this law had gotten here in time for Lisa, Carla, and the millions of 

other women who deserved more than they got. I am here today for them. Thank 

you. 

Chairman ROE. Mr. McPhearson? 

STATEMENT OF JOHN MCPHEARSON, CEO, LECTRODRYER, 

RICHMOND, KENTUCKY 

Mr. MCPHEARSON. I would like to start by emphasizing that our 

company, Lectrodryer, and I personally, believe in universal 

healthcare. We have during our tenure as owners offered the best 

possible healthcare coverage to our employees. Our current cost 

averages $3.68 per hour per employee, far in excess of any of the 

proposed penalties or fines in the Affordable Healthcare Act. Our 

costs have increased every year in the last 12 years, and the quality of coverage we are able to offer has declined steadily since the 

health insurers have continued to reduce the quality of their best 

plan. 

CEWDOCROOM with DISTILLER

51 

What I would like to present is the impact the AHA has had on 

our company to date, current concerns, and what we believe are the 

issues going forward. 

To date the impact on Lectrodryer has been a significant investment of time by our HR manager and upper management to understand the Affordable Healthcare Act. This has involved seminars 

and meetings with health care professionals and HR professional 

groups. It has been complicated by the massive size of the act and 

the continuing clarification rulings and changing dates. 

Additionally at this time, there is no information about the required State exchanges that we will have to offer on October the 

1st. While we are required to notify our employees about these options by that date, we at this time have no details or information 

to answer the questions we are sure will come. Businesses do not 

like uncertainty. At this time there is significant uncertainty about 

the Affordable Healthcare Act’s impact on Lectrodryer, both financially and operationally. 

The period from now until the end of 2013, assuming no additional date changes, will require us to do additional work in HR to 

document our employees’ participation and meet the other reporting requirements of the Affordable Healthcare Act. At this time we 

believe that will be, at a minimum, 2 weeks of work for our HR 

manager. Considering that this constitutes 11 percent of her time, 

it is no small cost. 

Going forward our concerns are considerable. The decision to 

manage the Affordable Healthcare Act through the insurance companies is a decision that will have significant long-term repercussions. We believe the four plans offered in the Affordable 

Healthcare Act, platinum down to bronze, will become the de facto 

plans offered by the healthcare companies. While some of the features of the plans, like lifetime maximums, are improvements, we 

feel the overall coverage will deteriorate for most of our employees. 

Our current plan co-pays and prescription benefits are better than 

those of the platinum plan we have seen offered. These everyday 

costs will have an impact on our employees. 

As a small business, one of the ways we have been able to distinguish ourselves as a better company has been to offer superior 

healthcare benefits. This has also helped us retain our employees. 

If we are correct that all companies will wind up with the same 

plans, this will simply take away one of the few options we have 

had to attract and retain the best employees for our company. 

I am also concerned that the AHA does not address what has 

been a key concern in recent years for our company to control costs. 

It is personal responsibility. As an example, Lectrodryer offers a 

monthly monetary incentive for health club membership, but the 

employee must provide proof of use or attendance. While the AHA 

provides benefits for preventative measures like annual physicals, 

it offers no penalty for not participating. It only guarantees you 

will be taken care of regardless of your personal behavior. 

One of the unique parts of the Lectrodryer business is that we 

have for the last five years exceeded 70 percent export sales. This 

has required me to travel extensively to many countries, including 

a number which have what is widely reported as universal 

CEWDOCROOM with DISTILLER

52 

healthcare coverage. It is my conclusion that healthcare is about 

good, affordable access to doctors and healthcare facilities. 

I am sure that was the intent of the Affordable Healthcare Act, 

but the reality is the law seems to be a lot about insurance companies, additional regulations, and the IRS. I do not see anything 

that guarantees that people in eastern Kentucky will have enough 

doctors and hospitals that they can access easily. 

Lectrodryer as a responsible employer has provided the best 

available healthcare benefits to our employees for the entire time 

we have owned the company. But now I believe the Affordable 

Healthcare Act will increase the cost of coverage, reduce the quality plans we can offer, and add additional regulatory burdens and 

costs to our company, this in a world that every day demands we 

be more efficient and competitive. As I started, we believe in universal healthcare. We just wonder why we as one of the small businesses of Kentucky have yet another burden added to our workload. 

Thank you. 

[The statement of Mr. McPhearson follows:] 

CEWDOCROOM with DISTILLER

53 

CEWDOCROOM with DISTILLER


Insert offset folio 1 here 82448.001
54 

CEWDOCROOM with DISTILLER


Insert offset folio 2 here 82448.002
55 

Chairman ROE. Thank you. 

Mr. Guthrie? 

Mr. GUTHRIE. Thank you very much. Thank you, the second 

panel, for being here today. And I appreciate it very much. 

We hear from a lot of businesses, and I talk to businesses. It is 

affordability as well. It is, can we afford to provide this for employees? A lot of businesses do, as Congressman Roe talked about. And 

I can tell you from experience, you said insurance has increased 

every year for the last 12 years, which obviously pre-dated the Affordable Care Act. 

And so, the battle, I think, that we have or the issue is, how do 

we get a handle on the costs? And for a lot of people, one of the 

criticisms of the Affordable Care Act, it did not really try to deal 

with the costs of providing healthcare. And is there any of the 

three employers here that you see that this law is going to make 

the health insurance—and I read your testimony. I know where 

you are going with it. Is the health insurance you provide to your 

employees cheaper or more affordable? 

Ms. MOORES. It certainly won’t for my business or any of the clients we have been working with. Mr. Meadows. Unfortunately the 

opposite for us. 

Mr. MCPHEARSON. Our indications from our insureds is that we 

will be facing significant increases, as everyone else has reported 

here. 

Mr. GUTHRIE. So it has been increasing, and whether it increases 

more or not, it is increasing at least at the same level, so it really 

has not— 

Mr. MCPHEARSON. The indications are it will be a much more 

significant increase next year. 

Mr. GUTHRIE. And you said 92 percent, I think. 

Ms. MOORES. Ours went from a 10 percent increase to 92 percent. 

Mr. GUTHRIE. And, Mr. Meadows, you said that you are still 

waiting for guidance, because this hearing is about how the Affordable Care Act is affecting job creation in Kentucky, guidance. And 

Mr. Kanaly was here earlier. We asked him how some provisions 

would affect him. He said, well, I just do not know. I would have 

to know what provisions, how they affect me, and then I have to 

see how much it is going to cost me. 

And so, you know, for the last 3 years, I guess, and everywhere 

I go when I talk to employers, that is what you hear. It is, we just 

cannot make decisions, and, you know, we are October 1st going 

live. And we do not how much to buy on the exchange, and we do 

not how much exchange is going to cost us. We are 5 weeks away 

from my family having to make healthcare decisions, and we do not 

have that available to us. 

And it just seems that talk about how the uncertainty that the 

employers have—I am talking about employers and I am talking 

about job creation—has affected your ability to move forward on 

growing your business or making business decisions. I think that 

is replicated throughout the whole country. Is that kind of how 

that has affected your decisions? 

Ms. MOORES. Well, I would agree with you because at one point 

I had three offices: Lexington, Georgetown, and Frankfort. And 

CEWDOCROOM with DISTILLER

56 

now, we are operating strictly out of the Lexington office, so that 

meant reducing staff, causing people looking for work to have to 

come to us instead of if we are filling a job in Scott County, we 

could have had our Scott County office. 

You have to cut your overhead wherever you can, and that involves some real sad decisions sometimes as far as locations, employees. You want to be near your clients. You want to be near people who are looking for work, job seekers. But you just cannot afford it with all of these expenses. 

Mr. GUTHRIE. How has the uncertainty affected your business, 

Mr. Meadows? 

Mr. MEADOWS. The uncertainty of the Affordable Care Act certainly has an impact, but more related to just the not knowing necessarily until certain regs are unveiled and so forth. 

But the economy itself has made it questionable, and the growth 

that we had in past years versus what we have had in most recent 

years, it has truly been a challenge. It is an extremely competitive 

marketplace. It is not a marketplace today that lends itself to adding costs. 

So I would say most retail employers in such a competitive environment, you are doing all you possibly can to control your expenses and your costs simply because growth is so restrictive at 

this point. 

Mr. GUTHRIE. Is there a difference? 

Mr. MCPHEARSON. Yeah. Well, certainly the worldwide economy 

is an interesting subject. As I mentioned, we export over 70 percent 

of our business. We are a manufacturer, also one of those that is 

a little bit of—everybody wonders how you do that, and we think 

we can compete very well from Kentucky. 

But the fact of the matter is that all of our customers have 

moved even though we have not. And so, all of the major manufacturing firms are now located somewhere else in the world. And 

businesses are springing up there trying to compete with us in 

China, in India, a variety of places. So we face those challenges 

and have to be extraordinarily competitive. 

So this year we made the decision because of a variety of 

things—there were also some other issues in Congress which left 

us with some uncertainty—that we were going to try and consolidate. And we have been growing constantly. We have had years of 

40 and 60 percent growth. This year we just plan to stay level, to 

be quite frank. 

Mr. GUTHRIE. I think I see my time is just expiring, so thank you 

for your answers. And I yield back. 

Chairman ROE. I thank the gentleman for yielding. 

Mr. Yarmuth? 

Mr. YARMUTH. Thank you, Mr. Chairman. I am going to ask a 

few questions, but I first want to make one comment. Ms. Moores, 

there is a lot about your testimony I disagree with. But one thing 

is irrefutably wrong, and while you may feel that the Affordable 

Care Act is unconstitutional, the Supreme Court has said it is constitutional, and that is the only judgment that matters in that regard. 

Ms. Basham, I thank you for your testimony. Thank you for 

sharing your story and those of women you have worked with. 

CEWDOCROOM with DISTILLER

57 

When we get back to Washington in a few weeks, we will face a 

debate about whether to defund the Affordable Care Act or in some 

way shut down the government, and maybe take some other action. 

For those you have worked with and for yourself, what would the 

impact of defunding the Affordable Care Act be? 

Ms. BASHAM. Well, the impact would be absolutely what my testimony said. We would lose American citizens. We would lose mothers, and sisters, and wives. We would lose the dignity of our country, for our fellow Americans. 

We would lose families being able to have coverage and have a 

choice in what they want to have. We would lose care. Many 

women cannot get insurance, nor small children that are born with 

defects or with preexisting conditions. So I believe that our country 

would lose immensely when we have grown and grown as a country 

over every problem that we have ever had. 

I truly believe that business is wise enough to come up with 

ideas to work around the situation because what is more important, your American workers living a healthful life, and coming to 

work, and giving out a good product, or them going through what 

will happen to them health-wise if we do not have this? 

Mr. YARMUTH. I thank you. And I understand that when you told 

people in your support group that you were going to testify here, 

you asked them to share their stories, email and letters. Would you 

be willing to share those stories with us? 

Ms. BASHAM. Yes. There are a few here. 

Mr. YARMUTH. Just if you have them documented. 

Ms. BASHAM. I have them— 

Mr. YARMUTH. Not read them. Will you be able, for the record? 

Ms. BASHAM. For the record, yes, I will. 

Mr. YARMUTH. Mr. Chairman, I ask unanimous consent— 

Ms. BASHAM. Yes, I will be glad to give them. 

Mr. YARMUTH.—that we put them in the record. 

Chairman ROE. Without objection, so ordered. 

[The information follows:] 

CEWDOCROOM with DISTILLER

58 

CEWDOCROOM with DISTILLER


Insert offset folio 3 here 82448.003
59 

CEWDOCROOM with DISTILLER


Insert offset folio 4 here 82448.004
60 

CEWDOCROOM with DISTILLER


Insert offset folio 5 here 82448.005
61 

CEWDOCROOM with DISTILLER


Insert offset folio 6 here 82448.006
62 

CEWDOCROOM with DISTILLER


Insert offset folio 7 here 82448.007
63 

CEWDOCROOM with DISTILLER


Insert offset folio 8 here 82448.008
64 

CEWDOCROOM with DISTILLER


Insert offset folio 9 here 82448.009
65 

CEWDOCROOM with DISTILLER


Insert offset folio 10 here 82448.010
66 

CEWDOCROOM with DISTILLER


Insert offset folio 11 here 82448.011
67 

CEWDOCROOM with DISTILLER


Insert offset folio 12 here 82448.012
68 

CEWDOCROOM with DISTILLER


Insert offset folio 13 here 82448.013
69 

CEWDOCROOM with DISTILLER


Insert offset folio 14 here 82448.014
70 

CEWDOCROOM with DISTILLER


Insert offset folio 15 here 82448.015
71 

CEWDOCROOM with DISTILLER


Insert offset folio 16 here 82448.016
72 

CEWDOCROOM with DISTILLER


Insert offset folio 17 here 82448.017
73 

CEWDOCROOM with DISTILLER


Insert offset folio 18 here 82448.018
74 

CEWDOCROOM with DISTILLER


Insert offset folio 19 here 82448.019
75 

CEWDOCROOM with DISTILLER


Insert offset folio 20 here 82448.020
76 

CEWDOCROOM with DISTILLER


Insert offset folio 21 here 82448.021
77 

CEWDOCROOM with DISTILLER


Insert offset folio 22 here 82448.022
78 

CEWDOCROOM with DISTILLER


Insert offset folio 23 here 82448.023
79 

CEWDOCROOM with DISTILLER


Insert offset folio 24 here 82448.024
80 

CEWDOCROOM with DISTILLER


Insert offset folio 25 here 82448.025
81 

CEWDOCROOM with DISTILLER


Insert offset folio 26 here 82448.026
82 

CEWDOCROOM with DISTILLER


Insert offset folio 27 here 82448.027
83 

CEWDOCROOM with DISTILLER


Insert offset folio 28 here 82448.028
84 

CEWDOCROOM with DISTILLER


Insert offset folio 29 here 82448.029
85 

CEWDOCROOM with DISTILLER


Insert offset folio 30 here 82448.030
86 

CEWDOCROOM with DISTILLER


Insert offset folio 31 here 82448.031
87 

CEWDOCROOM with DISTILLER


Insert offset folio 32 here 82448.032
88 

CEWDOCROOM with DISTILLER


Insert offset folio 33 here 82448.033
89 

CEWDOCROOM with DISTILLER


Insert offset folio 34 here 82448.034
90 

CEWDOCROOM with DISTILLER


Insert offset folio 35 here 82448.035
91 

CEWDOCROOM with DISTILLER


Insert offset folio 36 here 82448.036
92 

CEWDOCROOM with DISTILLER


Insert offset folio 37 here 82448.037
93 

CEWDOCROOM with DISTILLER


Insert offset folio 38 here 82448.038
94 

CEWDOCROOM with DISTILLER


Insert offset folio 39 here 82448.039
95 

CEWDOCROOM with DISTILLER


Insert offset folio 40 here 82448.040
96 

CEWDOCROOM with DISTILLER


Insert offset folio 41 here 82448.041
97 

CEWDOCROOM with DISTILLER


Insert offset folio 42 here 82448.042
98 

CEWDOCROOM with DISTILLER


Insert offset folio 43 here 82448.043
99 

CEWDOCROOM with DISTILLER


Insert offset folio 44 here 82448.044
100 

CEWDOCROOM with DISTILLER


Insert offset folio 45 here 82448.045
101 

CEWDOCROOM with DISTILLER


Insert offset folio 46 here 82448.046
102 

CEWDOCROOM with DISTILLER


Insert offset folio 47 here 82448.047
103 

CEWDOCROOM with DISTILLER


Insert offset folio 48 here 82448.048
104 

CEWDOCROOM with DISTILLER


Insert offset folio 49 here 82448.049
105 

CEWDOCROOM with DISTILLER


Insert offset folio 50 here 82448.050
106 

CEWDOCROOM with DISTILLER


Insert offset folio 51 here 82448.051
107 

CEWDOCROOM with DISTILLER


Insert offset folio 52 here 82448.052
108 

CEWDOCROOM with DISTILLER


Insert offset folio 53 here 82448.053
109 

CEWDOCROOM with DISTILLER


Insert offset folio 54 here 82448.054
110 

CEWDOCROOM with DISTILLER


Insert offset folio 55 here 82448.055
111 

CEWDOCROOM with DISTILLER


Insert offset folio 56 here 82448.056
112 

CEWDOCROOM with DISTILLER


Insert offset folio 57 here 82448.057
113 

CEWDOCROOM with DISTILLER


Insert offset folio 58 here 82448.058
114 

CEWDOCROOM with DISTILLER


Insert offset folio 59 here 82448.059
115 

Mr. YARMUTH. Thank you. Mr. McPhearson, just out of curiosity, 

how many employees do you have at Lectrodryer? I just do not 

know enough— 

Mr. MCPHEARSON. Sixty-three full-time and 70 counting the coops, temporaries, and interns. 

Mr. YARMUTH. Great. In terms of, you know, I know there is a 

lot of speculation, and, Ms. Moores, you talked about your insurance carrier said that rates would go up by 92 percent in the second year. Have you checked with any other insurance companies 

as to about what similar coverage might cost, because there is a 

lot of speculation out there. And I know insurance companies are 

throwing out these numbers, but we do not know for a fact that 

is what your coverage would cost, I mean, do we? 

Ms. MOORES. Yes, we do because we shopped six companies, and 

the actuaries are the ones who gave us the 92 percent and the 10 

percent. 

Mr. YARMUTH. But you have not actually been sent a bill. You 

do not know it? 

Ms. MOORES. No. 

Mr. YARMUTH. You do not know. That could change considerably, 

could it not? 

Ms. MOORES. We shopped that out, and with what we have got 

that is coming down the pike with this Affordable Healthcare Act, 

that is what they have available. 

Mr. YARMUTH. That is what they have available. Did they explain why, because, for instance, I have talked to a major employer 

the other day who said that their rates were going to go up 7 percent, so— 

Ms. MOORES. It is the community rating section provision that is 

in the Affordable Healthcare Act that is getting the actuaries to 

have these astronomical increases for everyone. 

Mr. YARMUTH. Well, and that is what I am saying, that there is 

a lot of speculation out there, and we really do not know for sure 

what rates are going to be as we go forward. 

Ms. MOORES. If we get that law the way that it is in place right 

now— 

Mr. YARMUTH. Well, it is—I am sorry. 

Ms. MOORES.—community rating is there, and that is it. 

Mr. YARMUTH. I am sorry. It is the law. It is the law. It has been 

upheld by the Supreme Court. 

Ms. MOORES. The community rating is in it. 

Mr. YARMUTH. What was your experience before the Affordable 

Care Act? Well, I am sorry, let me ask another question. Everybody 

I know is concerned about jobs. We are all concerned jobs and job 

creation, and I know a lot of opponents of the Affordable Care Act 

talk about its impact on employment. But since the Affordable Care 

Act was enacted in 2010, and many of the provisions have been in 

effect, including people being able to stay on their parents’ insurance until 26, and the limitation on the lifetime benefits, and so 

forth. 

The private sector has added 6.7 million jobs. There have been 

808,000 additional jobs created in the healthcare sector. And as I 

said, a national survey of small businesses just recently showed 

CEWDOCROOM with DISTILLER

116 

that small businesses under 50 have added 6 percent employment 

just this year. 

Do you not think that is somewhat evidence that the Affordable 

Care Act is not having a deleterious impact on jobs? 

Ms. MOORES. I am glad you asked me that because I had to keep 

my remarks to 5 minutes. So I attached a list of sources that I 

used. There are 15 sources there. Those are not the real facts that 

you just quoted. 

Unfortunately, businesses cannot run their business based on 

projections that the government is giving us. That is not the true 

unemployment picture. That is not the true growth. If you will read 

what I put in there from the U.S. Department of Labor, for one 

thing, Forbes, just 15 different articles that I have pulled there, 

and they are all within the last few months, that will show you 

what the true numbers are, not what you just gave us. 

Chairman ROE. The gentleman’s time has expired. 

Mr. YARMUTH. Yes. Thank you, Mr. Chairman. 

Chairman ROE. Mr. Barr? 

Mr. BARR. Thank you. Before I ask questions, I would want to 

just make an observation about the question of the constitutionality of the Affordable Care Act, and that is that while a slim 

majority of the Supreme Court upheld the taxing power of the Congress to impose the individual mandate, it is noteworthy that a majority of the Supreme Court denied the Administration’s principle 

rationale for the constitutionality of the act, namely the commerce 

power. And it should be noted for the record that the Supreme 

Court specifically denied that Congress has the power under the 

commerce clause to mandate individuals by particular product. 

Also, the question about whether or not the executive branch has 

the power to unilaterally pick and choose what provisions of statutory law it elects to implement and what provisions it elects to not 

implement, I think is clearly still an open question. And I think 

whether or not by unilaterally delaying the employer mandate for 

one year falls within the President’s power is an open question, I 

think, subject to scrutiny. 

Mr. McPhearson, let me ask you a quick question about—I was 

particularly interested in your testimony that you travel a great 

deal across the globe. And many people compare the American 

healthcare system to the Canadian healthcare system, for example, 

as an example of government-run healthcare versus our partial 

market-based system prior to Obamacare. 

The chief justice of the supreme court of Canada in commenting 

on the Canadian healthcare system made an important observation, that access to a waiting line is not access to healthcare. Do 

you care to comment, Mr. McPhearson, in terms of your international travels about whether or not access is something that your 

employers under a market-based private health insurance system, 

whether or not access is something that you are able to provide for 

your employees? 

Mr. MCPHEARSON. I do not think there is any doubt that my employees get extraordinary care by comparison to most places in the 

world, but they are well insured. You know, part of my comments 

certainly deals with that part of the issue that it has gone forward, 

and I think that is problematic. 

CEWDOCROOM with DISTILLER

117 

What we do see or what I have seen personally, and because it 

is a topic of discussion, I try and talk with people that I work with 

at other places. And what you see evolving is while you may have 

access, you do not choose your doctor, you do not choose when you 

get the care. And in many places, there are two levels of care: those 

that are in the general population and those that have the money, 

although some would argue that exists here already as well. 

Mr. BARR. But one quick follow-up question for you, Mr. 

McPhearson, and that is, you testified that your HR manager will 

spend a significant percentage of her time working on issues related to compliance with the healthcare law. What steps—well, let 

me just ask you this. What does that do in terms of taking time 

away from your staff to do the other parts of your job, and how is 

that going to negatively impact the other health benefits or other 

employee benefits that you provide? 

Mr. MCPHEARSON. It certainly is an issue. You know, HR is responsible for health and safety, all the issues that are typically 

under that umbrella in our company. And we are approaching the 

point where we might to have add a second employee just to deal 

with that. That is a potential. 

Mr. BARR. Mr. Meadows, if I could ask you a question about your 

testimony. Have you all made any changes regarding for planning 

for the healthcare law as a result of the Administration’s unilateral 

decision to delay the employer mandate? 

Mr. MEADOWS. We have not. We have continued in the same 

mode that we currently are, so we did not change our course. 

Mr. BARR. So it remains a great uncertainty for your employees 

and for your business planning, the fact that there remains the 

prospect of this employer mandate hanging over your head. 

Mr. MEADOWS. Certainly that is true. 

Mr. BARR. And another question. Are the benefits that you currently provide to both your part-time and full-time employees, are 

they in jeopardy as a result of some of the costly mandates of the 

Obamacare law, including your testimony about the $63 reinsurance fee? Does that jeopardize other benefits that you provide for 

your employees? 

Mr. MEADOWS. I would not speculate that it is necessarily going 

to jeopardize any other benefit. But benefit administration, you 

have a budget, so how you are going to allocate that budget if 

healthcare takes a greater portion of it, then, yes, potentially some 

other benefit may, in fact, feel the repercussion from it. 

Mr. BARR. I see my time has expired. I yield back the balance 

of my time. 

Chairman ROE. I thank the gentleman for yielding, and I, again, 

thank the panel for being here. 

And I want to just with a couple of statements that I would 

make. First of all, I believe a healthcare decision should be made 

between a physician, the patient, and that patient’s family. It 

should not be made in consultation with the government. It should 

not be made in consultation with insurance companies. It should be 

made between a patient and the doctor. 

I have sat down and had the conversations, Ms. Basham, many, 

many times in my career. As a matter of fact, my practices averCEWDOCROOM with DISTILLER

118 

aged seeing one new female cancer a week for over 30 years that 

I was there, the same for breast cancer. Very aware of that. 

And a couple of statements, and I want to tell you that this goes 

from the time I was in medical school, to show how things have 

changed in this Nation. In the late 1960s when I was a medical 

student in Memphis, I went and started IVs at St. Jude’s Children’s Hospital. I can still see some of those children’s faces today 

40 years later. Ninety percent of those children died. Today, 90 percent of those children live, and each child that is sent to St. Jude’s 

Children’s Hospital is treated for free. Their families are transported and put up for free. 

We have a branch of St. Jude’s Children’s Hospital in Johnson 

City, Tennessee where I practiced, and the same thing happens 

there. It is a phenomenal place. And cancer survival rates—if you 

came to me in 1977 as a woman with breast cancer, I would have 

to tell you had a 50/50 chance of surviving 5 years. That has gone 

up astronomically. And are we there yet where we need to be? Absolutely not. 

And there are situations, and certainly the cases you talked 

about I have seen in my practice. But the thing that I have never 

seen is a patient denied care, at least in our community. I cannot 

speak for Lexington. 

Ms. BASHAM. But— 

Chairman ROE. I am going to finish. There are things we can do 

to make sure that does not happen in this country. 

And I also want to thank Mr. Meadows and his company at Food 

City. They have 5 stores in my—we shop there, full disclosure. It 

is a great company. I know the leadership of that company. They 

hire a lot of people in my community. Thank you for being in our 

community. 

One of the effects that has not been talked about, because this 

is on employer based. I live in rural Appalachia. There are three 

hospitals in my district and counties in my district that may go 

broke. They may go out of business. And across the country, there 

may be as many as 400 or 500 rural hospitals that because of the 

payments not necessarily with the employer side, but with the 

Medicare and Medicaid side, that may not survive the Affordable 

Care Act. And I do not know whether you all have seen that here, 

any of you all in rural Kentucky or not, and certainly probably 

eastern Kentucky where we are going to drive today. 

But I think the key issue we have today, and Mr. Yarmuth and 

I have talked about it and others today, jobs are the key. If we can 

get our economy cranked up and going, a lot of these problems go 

away because companies do want to do what you are doing at that 

great company in Richmond, Kentucky, is to provide jobs. We want 

to hire people. That is absolutely what we want to do. 

And so, I would ask, Ms. Moores, if you would comment, since 

that has been your life’s work is to provide employment for people. 

Am I correct or incorrect? 

Ms. MOORES. You are exactly right. And when we are employers, 

we are providing jobs, keeping people off the unemployment rolls, 

keeping them off the disability rolls, keep them off of workers’ 

comp, and all these other government assistance programs. Plus 

they are paying taxes, and we are paying taxes. 

CEWDOCROOM with DISTILLER

119 

So the answer is to increase the jobs. That is where the money 

comes back into the government. 

Chairman ROE. I totally agree. And if you do not think it does 

not have a paralyzing effect, our largest employer in our community is our hospital system, 9,000 employees. We have a medical 

school, a pharmacy school, and we are a large referral area. I have 

been there 35 years. It is the first time that hospital has laid off 

anybody. It laid off over 300 people. My practice is not hiring anybody right now because of the uncertainty. 

Hopefully this will get better, and I would hope going forward 

that we would wait. I would like to see this delayed a year until 

we have a longer time to digest what was going on. 

To give you an example, and I think Mr. Guthrie referred to it. 

Each year around July, we would try to get our insurance straightened out for first of the year. I cannot even tell the people who 

work for me in the U.S. government 5 weeks from now, and neither 

can anybody on this panel, what the rates are going to be for the 

people who work for me in my congressional office. I do not know. 

We are mandated by law to buy our health insurance through the 

exchange, so I cannot tell anybody what their rates are going to be. 

That is uncertainty, folks. And if you are a business out there 

trying to figure out what to do come January 1, you have payroll 

to meet. If you do not have the money, you go out of business. Mr. 

Barr has already made some huge—not just the Affordable Care 

Act in fairness. It has been the economy, too. It has been more 

than just one thing. It has not just been the Affordable Care Act. 

It has been the costs of energy, uncertainty in the world. It is a 

world economy now. There is no question all of that is true. But 

this uncertainty right now certainly has added to it. 

Well, I see my time has expired, and I will gavel myself now. 

So anyway, I want to thank all eight witnesses. Let me tell you 

how much I want to thank—we will do that first. I want to thank 

all of you for being here today. This is the way America—I put a 

uniform on and left this country 40 years ago right now to serve 

this Nation in the U.S. military so that we could be free and have 

these kinds of events out here. And I want to thank those of you 

all that sat here attentively and not disrupted this. I appreciate 

what you have done. You are what make this country great and 

make all of us up here, regardless of our political affiliations, proud 

to serve you all. 

Lexington is a great community. I have been here many, many 

times, and we have great representatives here. And I commend you 

on the people you have sent, and thank you for attending. And I 

want to thank our witnesses again for being in front of the committee. 

I will now ask if any members, Mr. Guthrie, have any closing 

comments. 

Mr. GUTHRIE. Just welcome you to Kentucky. It is great to be 

here. It is great to represent this part of Kentucky. I do not have 

Lexington and Fayette County. I do have some of Jessamine, a 

good bit of Jessamine. And I always like to say, I know Representative Barr says he is from the district of Henry Clay. Well, I know 

the Ashland house is nearby, but Henry Clay represented the 2nd 

District of Kentucky during that era. 

CEWDOCROOM with DISTILLER

120 

[Laughter.] 

Mr. GUTHRIE. So I appreciate following in his footsteps. Thank 

you. 

Chairman ROE. Mr. Yarmuth? 

Mr. YARMUTH. Actually I think Henry Clay represented Louisville for one term. 

[Laughter.] 

Mr. GUTHRIE. He represented all of us. 

Mr. YARMUTH. Yeah, it did not make much difference. No, I want 

to thank my colleagues and assure those who are here today and 

those who may read the accounts of this hearing that we all on this 

panel want to make sure that we do the best job we can for the 

American people. And I wish the environment was such that we 

could work to make the Affordable Care Act function as well as 

possible rather than having a debate over whether we preserve it 

in the law. 

But ultimately, I totally respect particularly the business people 

who are here. Again, I have been in business. I come from a family 

of business people. And I know the struggles that all businesses 

face, particularly in tenuous times, and this is one of those. So 

thank you for trying to do the best by your employees. 

Ultimately, we need to have a country that works for everybody, 

and I think those of us who supported the Affordable Care Act, 

even when we would have preferred something different, and I am 

one of those. 

[Disturbance in hearing room.] 

Mr. YARMUTH. I think there are plenty of countries in the world 

that could offer us an important lesson about how to provide 

healthcare, even though I do believe that we have the best 

healthcare on earth if you can afford it. 

And that is what we just have to do our best to make sure that 

same level of care is accessible to as many people as possible. And 

that is what I certainly have been trying to do in my work on the 

Affordable Care Act. And I look forward to continuing to work with 

it within the system to make sure it functions as efficiently and effectively as possible. 

I thank my colleagues for holding this hearing and allowing me 

to participate. And, again, thanks to the witnesses, and thanks for 

your work. And we look forward to working with you, again, to 

make sure that we solve whatever problems exist with the law and 

work to make it work efficiently both for employees and for employers. 

Thank you, Mr. Chairman. 

Chairman ROE. I thank the gentleman for yielding. 

Mr. Barr? 

Mr. BARR. Thank you, Mr. Chairman, and thank you, Chairman 

Roe, for holding this field hearing in my congressional district, the 

6th Congressional District. I want to thank the Education and 

Workforce Committee for bringing this important hearing to our 

congressional district where we could hear from our constituents, 

my constituents, right here in central and eastern Kentucky to 

hear about the impact that the Affordable Care Act will have on 

them, their businesses, their employees, patients, doctors, and everybody who interfaces with the healthcare system. 

CEWDOCROOM with DISTILLER

121 

I want to thank my colleagues, both Congressman Guthrie, Congressman Roe, and Congressman Yarmuth. And I will say as the 

successor to Henry Clay’s seat in Congress that he did have an impact. He delayed the Civil War for 10 years. Obviously we would 

have wanted to avoid that terrible time in our Nation’s history. 

But I think what we are doing here is very, very important. And 

no matter where you fall on the political spectrum or where you 

fall in terms of this particular issue, you know, this is important 

work because it impacts one-sixth of the American economy. So we 

have got to get it right. 

And what we all want is access to affordable healthcare, low-cost 

healthcare, and we want doctors to be in charge. We want patients 

and doctors to have viable relationship. And we do not want to put 

the government as the intermediary between patients and doctors. 

We want access to healthcare. We want affordable healthcare. We 

do not want waiting lines, and we certainly do not want uncertainty for employers in a time of economic distress and high unemployment. 

So thank you to our witnesses for testifying here today, for bringing a lot of light to this very heated discussion. Thank you very 

much. 

Chairman ROE. Well, thank you very much, and I appreciate the 

audience staying around for most of this. We do this all the time 

in D.C. This is the sixth committee hearing I have held outside I 

have been part of. I think the best results I get are outside Washington where we do not have paid lobbyists and so forth that come. 

We have regular folks that come in and testify, and I want to 

thank them as the rest of the panel has. 

Look, healthcare decisions, when I went to Congress, one of the 

most disappointing things that happened to me was that I went to 

Congress 5 years ago naively thinking somebody cared what I 

thought. And I was disappointed because bringing 30 years of experience as a physician, also going through the healthcare reform we 

went through in Tennessee and then the reform of that, which was 

extremely painful, our TennCare plan that we went through. I 

thought I had something to offer to the debate. 

There were nine physicians in the House of Representatives, and 

I say this in all honesty, in all the years I served as a physician, 

I never saw a Republican heart attack or a Democrat heart attack. 

I never have operated on a Republican cancer or a Democratic cancer. It is something that affects every single American citizen in a 

personal way. 

And not one of us on the physician’s caucus was asked anything 

about this bill. And quite frankly, the bill that was passed, as my 

friend John Yarmuth said, was not what a lot of us would have 

wanted. It was not even the House bill that was passed, which, in 

my opinion, was a better bill. 

So I think we do have a lot to do here, to do in this to make 

health insurance—healthcare, I should say, not insurance, but 

healthcare more affordable and available to all of our citizens. And 

I agree with you. There is enough money in the system, I think, 

to cover everybody, but I will oppose because of what I have seen 

in many a government-run plan. 

Again, I want doctors and patients making those decisions. 

CEWDOCROOM with DISTILLER

122 

I thank you all very, very much for being here today. With nothing further, the meeting is adjourned. 

[Whereupon, at 12:19 p.m., the subcommittee was adjourned.] 

Æ 

CEWDOCROOM with DISTILLER